Participants Outline ICBA’s Plan for Prosperity Solution to Regulatory Burden
Washington, D.C. (March 9, 2017)—Community bankers from the Independent Community Bankers of America® (ICBA) today met with President Donald Trump and other senior officials at the White House to discuss how to unleash the full economic potential of community banks by passing targeted regulatory relief.
The ICBA community bankers in attendance were:
In the meeting with President Trump, Treasury Secretary Steven Mnuchin, National Economic Council Chairman Gary Cohn and White House Chief of Staff Reince Priebus, the ICBA community bankers and ICBA President and CEO Camden R. Fine shared specific examples of how excessive regulatory burdens affect their ability to serve their customers, make loans and create jobs at the local level. They also discussed ICBA’s Plan for Prosperity, a pro-growth platform to eliminate onerous regulatory burdens on community banks that inhibit lending and innovation. The comprehensive platform includes provisions to cut regulatory red tape, improve access to capital, strengthen accountability in bank exams, incentivize credit in rural America and more.
“The nation’s community bankers are committed to serving local consumers and small businesses and fostering economic and job growth from the ground up,” Romero Rainey said. “However, one-size-fits-all regulations are imposing unnecessary burdens on community banks that stifle lending and growth in local communities. ICBA looks forward to continuing to work with President Trump, his administration and Congress to advance common-sense regulatory relief that will support communities nationwide.”
More information on how community banks power local economies and create jobs is available in ICBA’s new “Community Banking: Know the Difference” video.
Today Senator Rounds introduced the “TAILOR Act of 2017” to dismantle the CFPB. We applaud the Senators efforts on behalf of South Dakota Community Banks and are doing everything possible to support him. The ICBSD continues to have regular conversations with the Senator and his staff to provided information and encourage his fight against the burdensome regulations that are draining your banks resources.
Rounds Introduces Legislation to Dismantle CFPB
WASHINGTON – U.S. Sen. Mike Rounds (R-S.D.), a member of the Senate Banking Committee, today announced he introduced legislation to dismantle the Consumer Financial Protection Bureau (CFPB) by eliminating its funding stream from the Federal Reserve.
“A product of the ill-advised Dodd-Frank Reform Act, the CFPB is an unaccountable regulatory agency ran by unelected bureaucrats with no oversight from Congress,” said Rounds. “No unchecked federal agency should have the power to dramatically alter the financial choices of consumers through the rules it promulgates. Dismantling the CFPB is but one step we can take to ease the regulatory burdens of Dodd-Frank, the cost of which continues to be handed down to American families. I look forward to working with my colleagues to roll back the CFPB’s power and prevent the agency from imposing any further harmful regulations.”
Rounds’ legislation amends the Consumer Financial Protection Act of 2010 to bar the transfer of funds from the Board of Governors of the Federal Reserve System to the CFPB. The bill also requires the CFPB to turn over all penalty funding and other money it has received to the Treasury of the United States. Text of the bill can be found HERE.
Mitchell S.D. (September 23, 2016) - Today the Independent Community Bankers of South Dakota (ICBSD) applaud the bipartisan leadership of U.S. Sen. John Thune (R-S.D.), and U.S. Sen. Ben Cardin (D-Md.) on the Finance Committee’s approval of an amendment to the Retirement Enhancement and Savings Act of 2016. The Amendment provides for important updates to the laws governing S corporations and provides for a streamlined process to help community banks become S Corporations.
Thirty-six community banks in South Dakota and 2,038 community banks in the United States have chosen to organize under Subchapter S of the Internal Revenue Code, simplifying their taxation so that they may better serve their customers. However, the tax code is outdated and unnecessarily restrictive in several respects. For example, it prohibits individual retirement accounts (IRAs) from holding shares in an S corporation. Many S corporation bank owners would like to be able to tap their IRAs to inject capital into their banks. This amendment provides an important provision allowing shareholders to continue ownership in the S corporation bank without reducing the value of their IRA should the bank decides to make an S election.
“Access to capital is particularly important as community banks are facing regulator demands for higher capital levels under the Basel III Capital Accords and other regulations,” said Greg McCurry, president and CEO of ICBSD. “Community banks have limited means of raising capital. This amendment would allow funds held in IRAs to be used to help meet the challenges of the current capital regulatory environment. The ultimate beneficiary of these changes will be the South Dakota customers and the 35 different communities served by S corporation community banks.”
“The ICBSD is very encouraged that companion legislation has been introduced in the House of Representatives by U.S. Reps. Dave Reichert (R-Wash.) and Ron Kind (D-Wis.),” said McCurry.
The Financial Accounting Standards Board recently made important, ICBSD supported revisions to its proposed accounting update.
The revised Current Expected Credit Loss (CECL) proposal is more flexible and scalable for community banks, which will allow them to continue using their personal understanding of their local markets, instead of complex modeling systems to determine their loan-loss reserves. By allowing community banks to evaluate and adjust their loan-loss amounts using qualitative factors, historical losses, and current systems (such as spreadsheets and narratives), FASB has made important changes to its proposed accounting standard.
"The ICBSD and our member community banks are very pleased to see changes being made," said Greg D. McCurry, ICBSD President & CEO. "These changes will significantly reduce the burden on community banks in South Dakota and across our nation."
"FASB has clearly listened to the concerns of ICBA and the nation's community banks," said Timothy Zimmerman, ICBA Vice Chairman. "The revised standard includes important changes that address concerns with the irreversible damage the CECL model would have had on community bank lending to local consumers."
Dividends on Federal Reserve Stock Fully Restored for Smaller Community Banks, Higher G-Fees Eliminated.
An earlier version of the highway bill contained a steep cut in the dividend paid on Federal Reserve stock, from 6 percent to 1.5 percent, for member banks with assets of more than $1 billion. The bill also would have extended higher guarantee fees on loans sold to Fannie Mae and Freddie Mac. Both of these provisions were included to offset the cost of new transportation spending. As a direct result of ICBSD and ICBA advocacy, an effective grass roots campaign, and the coordinated support of 43 state-based community bank associations, the final bill completely eliminated the higher guarantee fee provision and significantly modified the Federal Reserve stock provision by creating an exemption for banks with assets of less than $10 billion and linking the dividend rate to the 10-year Treasury note. ICBSD and ICBA had advocated for elimination of the reduction in the dividend rate for banks of all sizes.
On December 4, the President signed a highway bill into law, which includes four significant community bank regulatory relief provisions: (i) an 18-month exam cycle for CAMELS 1 and 2 banks with assets of less than $1 billion: (ii) easier qualification for “rural lender” status under CFPB mortgage rules by elimination of the requirement that such lenders operate “predominantly” in rural areas; (iii) elimination of annual privacy notice mailings when a bank has not changed its privacy policies; and (iv) new SEC registration and deregistration thresholds for thrift holding companies, equal to those that apply to bank holding companies. All four of these provisions are included in ICBA’s Plan for Prosperity. In addition, the new law favorably modifies the application of the $15 billion asset threshold above which a bank may not count the proceeds of trust preferred securities as tier 1 capital. It restores $3 billion in recent cuts to the federal crop insurance program which were included in the recent budget agreement. In addition to these newly enacted provisions, both the Senate and the House have advanced meaningful community bank regulatory relief bills. In May, the Senate Banking Committee reported out the Financial Regulatory Improvement Act (S. 1484), which would provide automatic QM status for mortgages held in portfolio, short form call reports for banks up to $1 billion in assets, and a number of other relief provisions. The House Financial Services Committee has reported out a series of regulatory relief bills. Community banker advocacy during the Washington Policy Summit resulted in a surge of cosponsors for the Clear Relief Act (H.R. 1233 and S. 812), the Community Bank Access to Capital Act (H.R. 1523 and S. 1816), and other priority bills.
CFPB Broadly Expands “Small Creditor” and “Rural” Definitions. In September, the CFPB issued a final rule making changes to the “small creditor” and “rural” definitions used to implement the ability-to- repay/qualified mortgage rule, the escrow requirement for high-priced mortgages, and other rules. The final rule raises the annual loan volume origination threshold for small creditors and their affiliates from 500 to 2,000 first lien mortgages and provides an exclusion for mortgages held in portfolio. The asset test would be unchanged at $2 billion, though it will now include all affiliates that originate mortgages. With regard to rural area designations, any census block not defined as urban by the Census Bureau will now qualify as rural, in addition to the counties that were rural under the previous definition. In combination with a new statutory provision (described above) that eases the rural and underserved lender test by eliminating the condition that a lender “predominantly” lend in such areas, the new rural area designations will significantly expand the number of rural lenders. Both of these changes are the result of ICBA’s persistent advocacy on behalf of community banks including the ICBA 2014 Community Bank Lending Survey which provided an empirical basis for expanding these critical definitions.
In a major victory for community banks, the Federal Housing Finance Agency (FHFA) withdrew a proposed rule that would have imposed an ongoing mortgage assets test to retain membership in the Federal Home Loan Bank (FHLB) System. ICBSD comments stated the FHFA’s proposed rule was contrary to the will of Congress which has consistently expanded access to the FHLB system over the past 82 years. In addition, a massive grassroots effort produced more than 1,300 comment letters from community bankers urging the FHFA to withdraw the proposed rule.