Tennessee banks are continuing to choose state-based regulators rather than federal authorities having primary oversight. It’s called a charter conversion. A dozen banks in the last five years dropped their national credentials to become state-chartered in Tennessee.
It’s been a nationwide trend ever since the passage of financial reforms following the banking crisis. Tennessee Commissioner of Financial Institutions Greg Gonzales says his bank examiners spend more time with institutions that have a spotty track record, tailoring their approach.
“What you don’t want to do is to have one-size-fits-all laws — which a lot of times you get out of Washington — that treat the best and the worst exactly alike,” he says.
Gonzales says he’s also more concerned with the economic health of the state than federal regulators might be.
"Our mission is, number one, safety and soundness," he says. "But it's also to do it in a way that puts institutions in a great position to contribute to economic progress."
Gonzales denies that his office would be any more lenient. But a study out of the University of Chicago found that state regulators consistently went easier on banks than federal authorities like the Office of the Comptroller of the Currency.
The latest conversion in Tennessee was in October when Dickson’s First Federal traded in its national charter. The largest state-chartered bank is Pinnacle Financial, which made the switch in 2012.
“In this environment of fast-paced regulatory changes and all the uncertainty that surrounds it, I believe there is great value in close contact with regulatory decision makers who can meet face-to-face and who understand the nuances of our markets,” Pinnacle CEO Terry Turner said at the time.