Small banks are going out of business in droves and blaming new government regulations.
“We were a very soundly run, profitable, growing bank that provided great rates and services,” Ron Wheeling, chief executive of Shelter Financial Bank in Columbia, Mo., told the American Banker. “The government is putting us out of business.”
Shelter Insurance sold its banking unit, joining other insurance companies, such as MetLife, Allstate and Prudential, in bailing out of banking.
The specific culprit, according to Shelter, is the Dodd-Frank Act requirement to provide two sets of financial statements, based on different accounting principles, to different regulators.
Keeping two sets of books would have cost $1 million a year, according to Wheeling.
The company was submitting financial statements to the Missouri state insurance regulator using statutory accounting principles used by insurers, according to the American Banker.
Then Dodd-Frank, passed in 2010, required it to give the Federal Reserve financial statements using the full-accrual generally accepted accounting principles (GAAP).