ICBA Policy Resolutions for 2013
ICBA Priorities for 2013

COMMUNITY BANK REGULATORY RELIEF

Position

• Community banks need regulatory relief to support the credit needs of their customers, serve their communities, and contribute to their local economies.
  
  
• ICBA has developed a “legislative platform” for the 113th Congress containing a number of targeted provisions that would provide regulatory relief for community banks.
  
  
• ICBA urges Congress and the regulatory agencies to continue to expand and refine a tiered regulatory and supervisory system that recognizes the differences between community banks and larger, more complex institutions.

Background

Regulatory and paperwork requirements impose a disproportionate burden on community banks thus diminishing their ability to attract capital, support the credit needs of their customers, serve their communities, and contribute to their local economies. Large banks have dedicated legal and compliance staff and can more easily absorb regulatory costs. Credit unions and other nonbank institutions that perform “bank-like” functions and offer comparable bank products and services are not subject to the same laws and regulations as community banks. This uneven playing field places community banks at a competitive disadvantage and increases costs to consumers.

Last Congress, ICBA initiated and promoted the Communities First Act (CFA), a key component of our regulatory relief agenda. A principal CFA provision was signed into law in April 2012 as part of the Jobs Act legislation. That provision increased the SEC registration threshold for banks from 500 shareholders to 2000 shareholders, and increased the deregistration threshold from 300 shareholders to 1200 shareholders.

In addition, several other CFA provisions advanced in the House including: a requirement that the SEC conduct a cost-benefit analysis of proposed accounting principles; elimination of annual privacy notices; an increase in the exemption level for the internal control attestation requirements found in the Sarbanes-Oxley Act; and a lower threshold for Financial Stability Oversight Council review of Consumer Financial Protection Bureau rules.

ICBA advocacy resulted in strong congressional support for CFA. The House bill in the 112th Congress had over 90 bi-partisan co-sponsors and was the subject of a hearing in the House Financial Services Committee at which ICBA testified.

For the 113th Congress, ICBA has developed a “legislative platform,” or set of community bank priorities positioned for advancement in Congress. The provisions of the legislative platform could be introduced in Congress individually, collectively or configured in whatever fashion suits interested members of Congress. Examples of platform provisions include exemptions from new mortgage requirements, measures designed to enhance the accountability of the Consumer Financial Protection Bureau, reforms to the bank examination process, and loosening investment restrictions on Subchapter S banks.

More broadly, ICBA strongly supports a system of tiered regulation—regulatory and supervisory policies that differentiate between community banks and other financial services providers. The Dodd-Frank Act provided for tiered regulation in several areas including an exemption for community banks from Consumer Financial Protection Bureau examination and enforcement, and indemnification of community banks from FDIC premium increases that will result from increasing the Deposit Insurance Fund minimum reserve ratio from 1.15% to 1.35%.

ICBA will continue to advocate for meaningful regulatory reforms including tiered regulation for community banks, their customers, and their communities.

Staff contacts:  Brian Cooney, Chris Cole

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