Florida and California Bankers, Far Apart but Flying Together

By Chris Bruce

Bankers in California and Florida may have a continent between them, but that’s not getting in the way of an annual pilgrimage to Washington, where both groups lock arms and make common cause in meetings with policymakers.

In September, the California Bankers Association and the Florida Bankers Association will make their 15th annual joint fly-in, where officials from both groups will spend several days meeting with elected officials and staff on Capitol Hill and key people in the Executive Branch, as well as other trade group officials.

Such trips aren’t unusual for trade associations, but the alliance between the Tallahassee-based Florida Bankers Association and the California Bankers Association, based in Sacramento, stands out. Though the two states are very different, the heads of both groups say they approach the needs of banks and their customers from a similar standpoint.

That makes for an effective partnership that comes together every year, they told Bloomberg BNA. “We have a lot in common,” said Florida Bankers Association President and Chief Executive Alex Sanchez, who’s been leading the group since 1998. “We’re coastal states with large economies and very diverse populations, so it makes sense to do this.”

Simone Lagomarsino, who just stepped into the president and chief executive’s chair at the California Bankers Association in April, said the same. “We have so much in common,” Lagomarsino told Bloomberg BNA. “California and Florida have the first and third-largest economies in the country, so there’s a lot of similarity and we think it’s an important trip for us to make together. We make a good team.”

Coast-to-Coast Partnership

Two groups have three main goals – regulatory relief, regulatory relief, and regulatory relief. The idea for a joint fly-in first arose as officials from both groups realized they faced similar challenges in connection with federal anti-money laundering laws that impose significant recordkeeping and reporting requirements on banks, including reports on suspicious transactions.

Over time, though, that focus has widened to include an array of other regulatory mandates. Sanchez said the Dodd-Frank Act is a major factor in itself, saying it’s making a command on limited resources that could be used to create new homeowners and new businesses owners. “We need relief from Dodd-Frank,” he said. “Small business formation is down and only a few new banks have been chartered since 2010, the year Dodd-Frank was enacted.”

Sanchez and Lagomarsino say some of those mandates standing in the way of a healthy economy. Among other changes, the California Bankers and the Florida Bankers, joined by other state banking groups, asked lawmakers in June to treat loans held in portfolios as “qualified mortgages.” Under federal regulations that implement the Dodd-Frank Act, such mortgages enjoy greater legal protection, but in the letter, bankers said the change also “would make home ownership more accessible without harming safety and soundness.”

“Right now we’ve come to a tipping point on the burdens from regulation, and members of Congress from both sides recognize that we have to do better to drive economic growth,” Sanchez said. “That, along with tax reform, will play an important role in our upcoming visit.”

Freeing Up Loans

The theme of easing access to credit is important to Sanchez and Lagomarsino. In a 30-minute telephone interview, both trade group heads kept returning to one topic – the need to free up loans for small businesses and consumers. Lagomarsino said the ability of the two groups to present a united front in those meetings provides an extra boost.

“Our bankers discuss with them real-life stories about their customers who’ve been impacted and our bankers can explain what that impact means,” she said. “In many cases we’re meeting with elected officials whose constituents are affected.”

Another advantage the Florida and California Bankers share is deep experience in with a very diverse base of customers and employees. “When you look at the demographics, we’re very similar in several respects,” she said. “Many of our customers and bankers are multilingual. That’s part of how they do business, and it’s part of living in these two states and what makes us different from some other parts of the country.”

Among other issues, both groups say tax exemptions for credit unions should end, a question both groups pressed last year and that’s likely to be on the agenda this year as well. In an Aug. 25 letter, Sanchez told Treasury Secretary Steve Mnuchin, Senate Majority Leader Mitch McConnell, House Speaker Paul Ryan, and other decision-makers that the exemption should be on the table as policymakers weigh high debt levels and a potential tax law overhaul.

“Given the precarious fiscal times our nation faces, we would like to urge members of Congress and the Administration to consider the issue of fair taxation, particularly with respect to credit unions,” Sanchez said.

The Sanchez letter came a few days after Lagomarsino penned an Aug. 2 column in the Santa Maria, Cal., Sun newspaper, saying the tax exemption for credit unions granted in the 1930s no longer makes sense. “Members of Congress are right to look at every option available to broaden the base and lower rates to support economic growth,” she said. “No industry should get a free pass in tax reform, and it is entirely appropriate for Congress to examine whether the statutes they established in the Depression era still match the facts on the ground.”

Sanchez took the chief executive’s role in 1998 after five years as the group’s vice president for government affairs. Among other positions, Sanchez served for nine years on the five-person Federal Retirement Thrift Investment Board after being nominated in 2002 by President George W. Bush.

Lagomarsino joined the California Bankers after a long banking career, most recently as chief executive of Heritage Oaks Bank, and president and chief executive of Heritage Oaks Bancorp, headquartered in Paso Robles, Calif. She currently serves on the boards of directors of the Federal Home Loan Bank of San Francisco and Pacific Premier Bancorp.

To contact the reporter on this story: Chris Bruce in Washington at cbruce@bna.com

To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com

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