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Tough new regulations are a burden to ‘Main Street’ banks that followed the rules

The banking industry earned many of the restrictive new rules under which it is now operating by engaging in risky practices that contributed to the Great Recession.

Having said that, it is also important to remember that not all banks participated in shady dealings. One of those upright banks is headquartered here in Buffalo.

Robert G. Wilmers, M&T Bank Corp.’s chairman and CEO, may not have said it outright in his recent letter to shareholders, so we’ll say it. His bank is among the honorable institutions that should not be lumped in with the unsavory actors that deserved to be reined in.

In reaction to the lapses by some big Wall Street banks, the government stepped in with tough regulations that treat all banks the same.

For this reason, Wilmers is rightly calling for a “healthier dialogue” between bankers and regulators. As he said, small and midsized banks, despite playing little, if any, role in the crisis, have been “swept into this vast change.”

Wilmers’ point is that the banks like M&T have been distracted from their traditional focus on “serving local families, businesses and farmers.” When banks cannot fulfill that important lending role, the local economy is slowed and families have a tough time reaching the American dream.

“Today we face a turning point,” Wilmers said. “Will we continue to look for villains to punish or will we take steps that will enable banks to serve again as agents of an expanding prosperity?”

So how do we move past the point of distrust? Wilmers said today’s banking environment constitutes a relationship between institutions and governing agencies that is less than collaborative. Banks are faced with having to prove themselves reformed.

Perhaps part of the answer is that politicians need to better distinguish between the problem banks and those that are investing in the community. Senior Sen. Charles E. Schumer, D-N.Y., could play a role in that effort.

Wilmers’ past remarks in distinguishing Main Street banks such as M&T from Wall Street banks with more complex business models is spot on. M&T is a remarkable community asset for Western New York. The fact that the bank has remained headquartered here while expanding to other parts of the nation demonstrates an extraordinary and sincere commitment.

It is true – not all banks are alike. And they should not be treated as such by government regulators.