Pandemic Banking: A Prologue to the Future

“What’s past is prologue.” —William Shakespeare, The Tempest

By Christopher Williston VI, President and CEO
Independent Bankers Association of Texas

I cannot see the future. Honestly, I am struggling to keep up with the present—but I am taking notes. These notes will serve as the prologue for a future in which there will be plenty of questions about what banks did or did not do to put the Paycheck Protection Program into place and get money into the hands of small businesses faster.

“Just get the money out the door!” I’ve heard, carrying with it an undertone of “Trust us—we’ll make everything right after the fact.” All of that would be fine, I suppose, if the present moment were happening in a vacuum. If bankers could somehow forget past experiences and block out any concern they may have for the future. It would be fine if every banker didn’t have a story about an SBA guarantee gone wrong. It would be okay if policymakers weren’t asking bankers to fight against decades of conditioning to identify and mitigate risk in order to just get that money out the door.

By putting the administration of the Paycheck Protection Program on the backs of banks—primarily community banks—policymakers called on bankers to perform a role to which they are accustomed. Community banks have always been the first line of defense when their communities are suffering. They always step up and fill the gaps left by hardship.

However, by not moving quickly to give bankers the answers they need in order to administer the program properly, policymakers in effect asked bankers to wager the safety and security of the bank to serve the urgent needs of today, risking the banks’ ability to power the recovery of their communities tomorrow.

Policymakers gambled on the reputation of community bankers by making them a conduit for the Paycheck Protection Program. If this were a hand of Texas Hold ’Em, it would be as if Congress made the ante and asked community bankers to play out the hand without being able to look at their own cards.

“If we could just get into the portal…,” bankers sighed in frustration at one point. Then it was, “If we just knew what note to use…”

With policymakers not moving quickly enough to resolve the hurdles along the way, the bet got more and more risky. The ability of community banks to come through for their customers was called into question, even while high-level administration officials boasted about the success of the program and how many loans the largest banks were originating.

If money did not flow fast enough to borrowers, it wasn’t for a lack of trying. It wasn’t for a lack of pleading for answers. It wasn’t for a lack of desire to save jobs in the places that community bankers call home.

There is another element of this crisis that requires attention—one final “past is prologue” consideration we cannot ignore:

We must consider that, over the past decade, one-third of the banks in this country have disappeared to M&A activity. If it were not for the coronavirus pandemic, one could reasonably assume that the disappearance of community banks would have continued unabated throughout 2020. And, I fear, the trend will continue when all of this is behind us, unless something significant changes.

While there are not a lot of silver linings that will come out of this crisis, if there is one I hope emerges, it is a collective opening of our eyes to the essential nature of community banks. If community banks are going to be the ones standing in the gap when a crisis strikes, then we’d better do everything we can to make sure that community banks survive and thrive. In so many communities where the big banks have come and gone, community banks are the only conduit for relief.

The reasons for the disappearance of community banks are many, but not least among them is the burden of regulations that make it hard for the smallest banks to survive, thrive and meet their customer needs. If we continue down the path that brought us to this moment, community banks will continue to disappear.

When all of this is over, we need a renaissance in community bank advocacy. We cannot go back to the way things were before. Our eyes have been opened. When the stuff hits the proverbial fan, there is no cavalry coming to save our hometowns. Community banks are the cavalry.

When the next crisis hits, we must be there to help. We need to push for whatever regulatory reforms are going to make that happen. If the past is prologue, then perhaps today in the midst of the COVID-19 crisis, we are living in the pages that will spark the rebirth of community banking.


Christopher Williston VI is president and CEO of the Austin-based Independent Bankers Association of Texas, the largest state community banking organization in the nation.