Republicans will eventually vote for financial reform, paving the way for the completion this year of a massive rewrite of rules for banks and financial markets, the head of the American Bankers Association said on Monday.
Ed Yingling, chief executive of the ABA, said at the Reuters Global Financial Regulation Summit in Washington D.C. that a bipartisan deal on financial reform is a real possibility, while also predicting that a crucial test vote scheduled for Monday afternoon would fail.
If you talk to Republicans, they don't feel quite the pressure, if you will, to vote for reform at this time, Yingling said. They will vote for a reform package and you can moderate this bill in some ways and change it in some ways fairly quickly and get 70 or 80 votes for it. It's not that far apart.
Yingling said the U.S. Securities and Exchange Commission's fraud charges against Goldman Sachs Group Inc has clearly given momentum to financial reform.
He also said a Senate proposal that could prompt banks to spin off their derivatives trading desks could have a notably negative impact on community banks.
Yingling said it could impact community banks' ability to extend loans with controlled interest rates, eventually hampering the extension of credit.
It would hurt lending, Yingling said about the proposal, which is expected to be included in the financial reform bill making its way to the full Senate floor.
He said there are other provisions of the bill that would prove onerous to community banks, including obligations to report all small business loans by race and gender.
These additional regulatory burdens will drive a number of community banks out of business, Yingling said.
He said there will be consolidation in the industry, but said the United States needs to remain a country with thousands of small banks.
The United States currently has about 8,000 banks.
There won't be some types of small business lending if communities must rely on a network of national banks, Yingling said.
(Reporting by Karey Wutkowski; Editing by Tim Dobbyn)