Regulatory compliance takes out-sized share of their time and money, business people say
Stigler banker Christopher Jordan summed up the impact federal regulations have had on his business with a simple example.
“If you were to sit in on our strategic planning meetings, the focus has changed from ‘What do we need to do to make more loans and get more deposits?’ to ‘How are we going to deal with this compliance issue?’” Jordan told 1st District Congressman Kevin Hern and Congressman Andy Kim of New Jersey.
“It’s really hard to pinpoint one (regulation),” Jordan said. “It’s a cumulative effect.”
Jordan was one of four witnesses to testify Monday morning at Oklahoma State University-Tulsa during a field hearing of the House Small Business Committee’s Subcommittee on Economic Growth, Tax and Capital Access.
Kim, a Democrat, is the committee’s chairman, and Hern is the ranking Republican.
Small business is a priority for Hern, who has been involved in several of them over the years. On Monday, he referred to the Small Business Committee as “an oasis” because it tends to work quietly and without the partisan bickering often associated with higher-profile committees.
“Think about what we consider large corporations,” Hern said, and then named several. “Every single one of them started out in garages as a one-person shop. The point today is, if small businesses aren’t growing, how are we going to have large businesses in the future?”
Kim, whose district stretches across south central New Jersey from the outskirts of Philadelphia to the Atlantic coast, said finding a regulatory balance is difficult but necessary.
Hearing from Oklahoma business interests, he said, helped give him a broader perspective.
“There are a lot of things that bind Oklahoma and New Jersey, but there are other things that are going to be different,” Kim said. “That’s exactly why Congressman Hern and I need to work together with other congressmen from all across the country to figure out where are the common threads and make sure that things that might be good for New Jersey aren’t bad for Oklahoma and vice-versa.”
Testifying Monday were Jordan, president of Farmers State Bank in Stigler and representing the Independent Community Bankers of America; Chad Selman, a pecan grower and cattle rancher from Skiatook and Oklahoma Farm Bureau officer; Howard “Bud” Grounds of the Petroleum Alliance of Oklahoma; and Elizabeth Osburn, senior vice president of government affairs for the Tulsa Regional Chamber.
Selman spoke mostly about agriculture’s need for experienced seasonal farm workers and his and the sector’s reliance on the H-2A temporary work permit program.
Selman said complying with the program is so complicated that he has to hire an independent contractor to handle the job. Bringing in H-2A workers is expensive, but finding American workers with the same expertise who are willing to take temporary seasonal work is next to impossible, he said.
Grounds said sudden major changes in policies related to oil and gas have made planning difficult in recent years. He said regulators and local and regional federal officials have been more willing to discuss compliance problems in recent years but that consistency in policy and enforcement remains an issue.
Osburn said businesses with 50 or fewer employees are 85% of the Tulsa Chamber’s membership and that many of those struggle to keep up with regulations and compliance. She said federal regulators have little or no understanding of small business and its challenges.
Hern and Jordan discussed at some length the dilemma financial institutions face regarding state-sanctioned medical marijuana businesses and federal banking laws that prohibit involvement in those operations.
“Even if a bank says, ‘Hey, we’re going to stay away from it,’ it’s going to touch you some way some how,” Jordan said.
As examples, Jordan cited bank accounts opened by employees of medical marijuana enterprises or property owners who rent space to such businesses.
“We just want to know we’re not going to get tagged for that inadvertent cannabis cash that might be coming through our institution,” Jordan said.
Hern said information gleaned Monday will be used to help write legislation in the months ahead.
“The big thing was the last question that was asked,” he said. “‘Do you think Washington, D.C., is listening to you?’”