A Boardroom Conversation

“Punish Wells Fargo. Don’t Come and Punish Me.”

C.R. “Rusty” Cloutier, chairman and CEO of MidSouth Bancorp., doesn’t shy away from giving you his political opinions, and he reflects a common sentiment that banking will do well under the Trump administration. He spoke to Bank Director digital magazine in December about his expectations for the future, and why some regulations are just ridiculous for community banks to follow.

Q: You were quoted in the New York Times after the election as saying “Main Street won.” Do you still feel Main Street has won and in what way?
RC: Absolutely. I think all the vibes we are getting are very positive for community bankers. I think it’s going to be more difficult for the systemically important financial institutions. With the administration coming in, if you break the law, you have to go to jail. All banks are going to get a tax cut. The net interest margin is going to increase. I think there will be less regulation on banks under $100 billion. I think Congress and the new administration think we need to regulate based on size, not one-size-fits-all.

Q: How would a reduction in corporate tax rates impact you?
RC: I think corporate tax rates will go down to 20 or 25 percent. One of our research analysts said it would add 10 to 15 cents to my earnings per year. Sandler O’Neill + Partners said that with the net interest margin swing, fewer regulations and tax relief, they thought banks would make about 40 percent more in 2018 than they would make this year. Those are substantial increases. We are very optimistic. We see the economy improving in our area. The administration [will be] very good for oil and gas.

Q: What’s at the top of your wish list for a new administration?
RC: Let us go back to work. We are regulated to death. On Main Street, let me give you a good example. The Wells Fargo [cross-selling] debacle is terrible. We don’t run a bank so big that we don’t know our customers, so that we don’t go to church with them, so that we don’t care that the local high school won a state championship. These aren’t numbers to us. These are real people.

I’d like the CFPB (Consumer Financial Protection Bureau) to get out of telling us what’s fair to our customers. In my town of Lafayette, there’s 125,000 people and 34 bank charters. There’s such a thing as competition. I think that’s key. If you violate the law, you are being removed and you’re going to jail. We spend so much time working on the regulations, it’s unbelievable. We have a very simplified model. We touch every loan. We know our customers. Don’t try to govern us with BSA (Bank Secrecy Act) and CRA (Community Reinvestment Act) like you try to do with the big boys. The most ridiculous thing for a community bank is CRA, because we care about our communities. That’s all we care about.

Punish Wells Fargo. Don’t come and punish me. We don’t need more laws. Enforce the laws we have.