Community Banks Unite with Bigger Lenders Against Rewards Programs

Community banks in the US are teaming up with bigger lenders to fight against allowing rewards programs for customers, fearing it would encourage them to move their deposits into stablecoins. This alliance has some community bank advocates concerned that they're losing their unique voice and power in Washington.

A former ICBA chief of government relations, Anne Balcer, said the organization is 'missing out on using their size and power to differentiate themselves.' She noted that a $500 million bank operating in rural Iowa would be lumped together with JPMorgan Chase, making it harder for community banks to stand out.

Longtime ICBA head Cameron Fine was described as 'militant' by multiple sources, willing to play hardball and clash with bigger banks. His successor, Romero Rainey, is seen as more conciliatory towards the big banks. Some community bankers feel that under Rainey's leadership, the ICBA has lost its grassroots persona.

The alignment with big banks may be due in part to shifting priorities in Washington, particularly with the crypto fight and a White House push to require banks to collect citizenship data. Community banks are fighting on the same side as bigger lenders against these initiatives.