Nov 26, 2017 3 min read

Millions of people and businesses already understand the appeal of Pennsylvania, which benefits from two major cities on either end of the commonwealth and lots of nature in between. However, this year, our state experienced its first population drop since 1985, which is coupled with a stagnant and persistent business startup rate that remains lower than the business exit rate. These numbers likely are interconnected; you need businesses to create jobs, but you also need people to start businesses and also fill jobs.

With these disappointing numbers in mind, it is crucial Pennsylvania’s elected officials – whether serving in the state government or representing the state in Washington, D.C. – focus on pro-growth policies that benefit citizens, businesses and, ultimately, the economy.

For our businesses to succeed, not only do they need a business-friendly environment, but they also need capital to start and expand. Often, small and medium-sized businesses turn to regional banks for this lending, as regional banks can support larger commercial projects, yet maintain close relationships within the community and best understand the environment. However, due to federal regulations, many regional banks have had difficulty lending to businesses and consumers, with an estimated reduction of $14-to-$20 billion over five years.

Because seven regional banks, including PNC, BB&T, and TD Bank, operate in Pennsylvania, it is especially important we support policies that ensure these institutions can keep their operations going.

The main issue stems from how regulators determine if a bank poses a risk to the financial system. Currently, Congress has a $50 billion asset threshold in place, whereby any institution that is larger than that is automatically deemed risky. However, this approach fails to take into account the nuances of all financial institutions.

For instance, regional banks like Huntington and M&T – which focus on lending and deposits – are much less risky than their large, complex counterparts like JP Morgan and Wells Fargo, yet they are subject to the same regulations just based on their size. However, there are even huge differences in their sizes; JP Morgan, for example, has more than $2 trillion in assets and has a number of assets tied to trading activity.

Thankfully, there is already proposed legislation which would fix this: The Systemic Risk Designation Improvement Act of 2017 (S. 1893 and H.R. 3312). This bipartisan bill would look at a bank’s full business model to determine its risk to the financial system. While size would be one factor, it would not be the only one, which allows regulators to examine all of the activities that go into risk.

With regulations tailored based on actual risk, institutions like regional banks can stop focusing on complying with burdensome requirements and turn to best serving their customers. This will not only help small businesses looking to start, but it would also ensure existing businesses have the resources to grow, ultimately helping our startup rate inch higher than the state exit rate for businesses.

Plus, if there are strong Main streets and attractive jobs, more people will want to move to – and stay in – Pennsylvania.

Since our state unemployment rate remains above the national average, we must look at every possible way to strengthen Pennsylvania’s economy, including reforming federal policies that are causing ripple effects in our communities.

Our congressional representatives in Washington, D.C., must take action and support the Systemic Risk Designation Improvement Act of 2017 so our economy can grow. This is one piece of the puzzle that is an easy, obvious fit and must be put into law as soon as possible.