Insurance people aren’t the only ones criticizing the Treasury Department’s regulatory proposals. The American Bankers Association and the Independent Community Bankers of America have voiced opposition to the bank-related proposals.

“Why should Main Street suffer as a result of the sins and behavior on Wall Street?” the Independent Community Bankers of America stated, referring to riskier financial practices that have roiled the markets since last summer. "Dismantling the thrift charter and crippling state banking charters will weaken banking in America," the group said in a statement.

Eliminating thrift charters would effectively do away with an industry dedicated to promoting home ownership at a time when more people are looking for traditional home mortgages, said Wayne Abernathy, American Bankers Association executive vice president for financial institutions policy. The plan outlined by Treasury Secretary Henry Paulson also would affect state-chartered banks, which account for 70 percent of banks, by requiring them to get national charters, making state charters redundant, he said. Then, even tiny banks would answer mostly to U.S. regulators instead of overseers in, say, Illinois, home to 42 state-chartered thrifts and 443 state-chartered banks.

“If I, as a small bank, have to answer to, to work with, to report to people in Washington as opposed to people in Springfield and the legislators who live and work in my district, I’ll be at a huge disadvantage,” said Michael Steelman, chief executive of the $60 million-asset Farmers & Merchants State Bank of Bushnell, Ill., 50 miles west of Peoria.

State Bankers Decry Plan for Reform (Chicago Tribune 4/2/08)

Insurers Divided Over Bush Regulation Proposal (Hartford Courant 4/1/08)

April 8, 2008