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Kansas bankers warn consolidation is shrinking charters; urge tailored federal rules and protections for community banks
Summary
Kansas Bankers Association and Community Bankers Association told the committee state charters are declining and urged regulatory tailoring, indexing of thresholds, and caution on proposed federal measures (stablecoin opt-in and a 10% federal credit-card cap) that could prompt deposit flight to nonbank platforms.
Kelly Van Zwol, senior vice president for government relations at the Kansas Bankers Association (KBA), and Doug Wareham, KBA president and CEO, told the Committee on Financial Institutions and Pensions that consolidation and federal regulatory burdens threaten the community bank model in Kansas.
Van Zwol said Kansas went from 203 to 188 headquarters from 2024 to 2025 and pointed to regulatory compliance costs and competition from nonbank platforms, including payment apps and cryptocurrency, as drivers of deposit flight. “When you're putting money into [nonbank apps], it's not protected in the same way a bank account is protected,” Van Zwol said during her presentation on industry outreach and fraud education.
Wareham urged federal changes including indexing regulatory thresholds and tailoring rules imposed after the 2008-era Dodd-Frank reforms. He said compliance costs and threshold triggers (examples cited at $500 million, $1 billion and $10 billion) can disincentivize community banks from growing and increase consolidation. “We have policies in place that are encouraging banks not to grow,” Wareham said.
Wareham and committee members debated a proposed federal 10% credit-card interest-rate cap, a measure being discussed in Congress. Wareham warned a rate cap could reduce access to credit for many cardholders and push consumers toward higher-cost alternatives. He also outlined concerns about federal stablecoin legislation (the transcript references the 'Genius Act' and related follow-up legislation), saying a state could opt into a federal-styled framework for state-chartered stablecoin issuers in 2027 but that nonparticipating stablecoin issuers would still operate in Kansas under other charters.
KBA described outreach and anti-fraud campaigns — including a 'family code word' concept and a 'Banks Never Ask' public-education spot — and noted the KBA's work with the state treasurer and attorney general on consumer education. KBA also referenced HB2560, which assigned EWA oversight to the OSBC, and said KBA will support tools to help banks respond to fraud and customer protections.
Committee members asked about tax-exempt lenders buying banks, new-bank formation barriers, and whether FDIC insurance and deposit guarantees after recent bank failures have contributed to deposit outflows from community banks; Wareham said the industry is discussing universal coverage and fair approaches to deposit insurance funding.
The presentation did not include committee votes; KBA representatives said they would follow up with materials and that they will be active in the Capitol during the session.
