AP FACT CHECK: A look at Tester's support of banking bill

HELENA, Mont. (AP) — Democratic senators who supported the banking bill that recently passed the Senate have come under fire from others in their party for backing changes in rules that were meant to deter a repeat of the 2008 financial crisis.

Sixteen Democrats joined Republicans Thursday in passing the measure. Sen. Jon Tester of Montana is one of those senators, and he's facing a tough re-election campaign in a state that voted for President Donald Trump two years ago.
Critics say the legislation, which must pass the House, will ease regulations on more than two dozen large financial institutions and increase the risk of another collapse. Tester's justification for supporting the bill mirrors that of the White House: The legislation will provide relief to small banks that must comply with the onerous rules in the 2010 Dodd-Frank bill.
Tester has repeatedly said Dodd-Frank has led to his home state of Montana losing many small banks, particularly in rural areas. His comments made in defense of the bill on the Senate floor last week are mostly true in and of themselves, but taken together, they paint a misleading picture of Wall Street firms gobbling up and shutting down small-town banks.
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TESTER:
"Since the passage of Dodd-Frank, the number of banks in this country has declined by 14 percent. And in our state of Montana, with some quick math, it's close to 30 percent."
THE FACTS:
The number of state-chartered banks in Montana has dropped from 64 in 2010 to 44 as of February, which is about 31 percent, according to the Montana Division of Banking. But there has not been an actual bank failure in Montana during that period, according to the Federal Deposit Insurance Corp.
Instead, that number has been reduced as small banks have merged with or been bought out by other banks, and as banks consolidated their branches' charters. There is a long trend of community banks being bought out by larger banks that pre-dates Dodd-Frank. Between 1985 and 2010, when Dodd-Frank passed, the number of community banks — defined as banks with less than $10 billion in assets — declined by 58 percent across the nation, according to the Government Accountability Office.
In Montana, the number of state-chartered banks was comparatively stable for the decade before Dodd-Frank passed, with between 63 and 66 banks in the state between 2000 and 2010.
Tester contends that Dodd-Frank has accelerated the rate of community bank mergers and acquisitions, and he said Thursday that the new bill will slow the rate.
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TESTER:
"As a result of complying with these regulations, many of our community bankers are hanging up their hats and our local banks are being swallowed up by bigger banks and ultimately they will be swallowed up by the folks on Wall Street."
THE FACTS:
An Associated Press analysis of 25 bank mergers and acquisitions in Montana since 2010 finds that all but three of the community banks being acquired were bought by other Montana-based banks — nearly all of which are also community banks. The largest bank in the Montana deals, First Interstate Bank, has $12 billion in assets, which puts it just over the $10 billion threshold that defines a community bank. The next largest, Glacier Bancorp, has just over $10 billion in assets.
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TESTER:
"If you're a product of rural America like I am, you know full well the consequences when a bank leaves town. It is just a matter of time before that community shrivels up. Folks, something must be done."
THE FACTS:
Nearly all of the bank branches in rural areas of Montana that were bought out since Dodd-Frank's passage have remained open. There was only a 2 percent reduction in the total number of bank branches in the state — 392 branches in 2010 compared to 383 in 2017 — according to the Montana Division of Banking.
Tester asserts that even though the doors haven't closed on the physical structure, a rural bank is fundamentally changed after an acquisition, with different leaders and a different business model that is no longer tailored to fit the community.
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