WASHINGTON – U.S. Sen. Tim Johnson, D-S.D., chairman of the Financial Institutions Subcommittee of the Senate Banking Committee, held a hearing July 8 examining the effects of the economic crisis on community banks and credit unions across rural areas. The hearing also looked at ways to ensure small lending institutions continue to serve the needs of their consumers.
“As chairman, I am proud to hold this hearing today to make sure states like ours are not forgotten in any financial regulatory overhaul. Smaller banks are a crucial part of our economy, with some lenders now paying the price for the risky strategies employed by some larger financial institutions,” Johnson said. “We cannot afford to let those bad actors that brought our economy to the brink cause the downfall of those responsible, smaller institutions that are the lifeblood of rural America.”
Many community banks and credit unions did not sell many of the questionable loan products as larger lenders. Despite this, small lending institutions and their customers are feeling the effects of the subprime mortgage crisis and the subsequent crisis in global credit markets, including job losses and the recalling of agricultural loans.
Johnson focused on the challenges facing community banks and credit unions as a result of the current economic crisis. Recognizing that small lending institutions are oftentimes very different from their large counterparts, Johnson also sought to highlight the effects of recent legislation on smaller lending institutions.
“I’m pleased that Sen. Johnson’s subcommittee is examining how the economic crisis has affected community banks, like CorTrust, in rural communities. It’s an important issue to community banks throughout the nation, as well as in South Dakota,” said Jack Hopkins, president and CEO of CorTrust Bank National Association in Sioux Falls, who testified at the hearing. “The topics discussed today will have an immense impact on community banks’ ability to continue serving their customers during such a critical time.”
Also testifying at the hearing were Frank Michael, president and CEO of Allied Credit Union, Stockton, Calif.; Arthur Johnson, chairman and CEO of United Bank of Michigan, Grand Rapids, Mich.; Ed Templeton, president and CEO of SRP Federal Credit Union, North Augusta, S.C.; and Peter Skillern, executive director of the Community Reinvestment Association of North Carolina.