NEWNAN, Ga. -- Georgia bank failures have drawn the attention of Congress.
The House Financial Services Committee's Subcommittee on Financial Institutions and Consumer Credit will host a hearing in Newnan Tuesday.
Rep. Lynn Westmoreland said the hearing will focus on the impact regulations may be having on community banks.
Since 2008, Georgia has led the nation in bank failures.
Westmoreland, a Republican, said the failures have hampered Georgia's ability to recover from the recession by drying up needed credit.
Heath Fountain, CFO of HeritageBank of the South in Albany, agrees that large and small banks across the country are hampered by "over-regulation." He traces the root cause of that to 2008, when metro Atlanta was hit hard in the housing crash. Most bank failures occurred during the worst of this period.
"Atlanta was one of the most overbuilt areas in the country," Fountain said.
According to Fountain, it was the nationwide monetary crisis and resulting public outcry that prompted passage of the Dodd-Frank Act, passed in July 2010, which was intended to correct problems within the banking industry.
"In reality, Dodd-Frank did very little," Fountain said. "Instead, it was a way for lobbyists to get every bit of anti-banking legislation they had wanted for years."
The biggest retailers were unhappy with charges they were getting on debit card fees and lobbied Congress to cut those fees so that they could pass the savings on to consumers.
"But the retailers didn't pass it on," Fountain said. "It just eliminated some of the fees we relied on to service our customers. That's only one example."
Fountain said that Georgia appears to be the state with the greatest number of community bank failures simply because it has so many community banks.
"We have 159 counties in Georgia," he said. "It used to be that every little community had its own independent bank. There was a regulation prohibiting banks from branching into other counties. There is a lingering effect."
Luke Flatt, CEO of AB&T in Albany, said he believes it was the housing crash of 2008 that caused the bank failures.
That doesn't mean he likes the regulations stemming from Dodd-Frank, though.
"It's as if you call a plumber for a leaking pipe and when you come back, he's put a whole new roof on the house. The roof is something you don't need, and it has nothing to do with the problem," Flatt said. "The new regulations are excessive and make it more costly and difficult to make credit available to our customers."
Flatt said he sees the problems caused during the crisis of 2008 and the current regulations as "two separate issues."
"Westmoreland linked the two issues for the purpose of the hearing, but they aren't really linked," Flatt said.