ICBA Legislative and Regulatory Successes 2006-2015
For a full list of ICBA's Legislative and Regulatory Successes from 2006-2015, download the PDF file below:
Recent Legislative & Regulatory Successes — Second Quarter 2017
FASB Heeds Community Bank Outcry, Significantly Modifying CECL.
Following a multi-year advocacy campaign, ICBA and community banks won significant changes in the Financial Accounting Standards Board’s (FASB’s) final standard on current expected credit losses (CECL). In a previous draft, community banks would have been required to use complex cash flow modeling to determine loan reserves. The final standard will allow community banks to rely on their judgment, knowledge of local economic conditions, and currently-used systems and tools, such as spreadsheets, to determine reserves. ICBA will follow through on this important victory by ensuring that regulators and auditors charged with implementing CECL honor the most recent revisions.
Community Bank Regulatory Relief and Crop Insurance Funding Authorization Signed into Law.
On December 4, 2015, the President signed the FAST Act into law, which includes four significant community bank regulatory relief provisions:
- An 18-month exam cycle for CAMELS 1 and 2 banks with assets of less than $1 billion;
- Expanded access to “rural lender” status under CFPB mortgage rules through elimination of the requirement that such lenders operate “predominantly” in rural areas (see description below of CFPB’s favorable implementation of this statutory change);
- Elimination of annual privacy notice mailings when a bank has not changed its privacy policies; and
- New SEC registration and deregistration thresholds for thrift holding companies, equal to those for bank holding companies.
All four of these provisions are included in ICBA’s Plan for Prosperity. In addition, the law restored $3 billion in funding to the federal crop insurance program that would have been cut by a previous budget agreement.
CFPB Expands Access to Rural Lender Benefits to Thousands of Community Banks.
A statutory change at year-end 2015 gave the CFPB discretion to expand access to “rural lender” benefits for “small creditors” (creditors with less than $2 billion in assets that originate fewer than 2,000 mortgages, excluding portfolio loans) by eliminating the requirement that a small creditor lend predominantly in rural areas to qualify. These rural lender benefits include qualified mortgage status for balloon loans held in portfolio and an exemption from escrow requirements on higher priced mortgages. In March 2016, the CFPB issued a final rule broadly interpreting the statutory change so that a small creditor that originates a single loan per year in a rural area qualifies as a rural lender. Combined with the CFPB’s expanded definitions of “small creditor” and “rural area,” the new rule eases regulatory burden for thousands of community bank mortgage lenders.
Dividends on Federal Reserve Stock Fully Restored for Smaller Community Banks, Higher G-Fees Eliminated.
An earlier version of the highway bill noted above contained a steep cut in the dividend paid on Federal Reserve stock, from 6 percent to 1.5 percent, for 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. As a direct result of ICBA advocacy, the final bill eliminated the higher guarantee fee provision and exempted banks with assets of less than $10 billion from the Federal Reserve dividend cut. For banks over $10 billion, Federal Reserve dividends are linked to the dividend rate on the 10-year Treasury note. ICBA had advocated for elimination of the reduction in the dividend rate for banks of all sizes.
FDIC Favorably Revises Assessment Rules.
As a result of ICBA’s advocacy, the FDIC scrapped the core deposit ratio as a financial measure for determining deposit insurance assessments of banks with assets less than $10 billion, substituting the brokered deposit ratio. Reciprocal deposits are treated as core deposits, as they are under current rules. Only brokered deposits in excess of 10 percent of total assets will impact assessment rates. Also, the one-year asset growth measure was changed so that only asset growth greater than 10 percent will impact assessment rates.
FHLB Membership Test Withdrawn.
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 for member banks of the Federal Home Loan Bank (FHLB) System.
Cyber Threat Information Sharing Bill Signed into Law.
On December 18, 2015, the President signed into law the Cybersecurity Act of 2015, which permits the Federal government and private sector entities, including community banks, to share cyber threat information such as threat indicators and defensive measures.
FFIEC Recognizes Voluntary Nature of Cybersecurity Assessment Tool (“CAT”).
In their most recently-published FAQ document, the Federal Financial Institutions Examination Council recognized ICBA’s position with regard to the voluntary nature of the CAT and the ability of community banks to use the cybersecurity assessment most appropriate for their institution.
Supreme Court Rules Favorably in Fair Lending Suits.
In March, the U.S. Supreme Court upheld an ICBA-supported lower court ruling that found that spouses who guarantee bank loans cannot bring discrimination claims against creditors under the Equal Credit Opportunity Act. A separate Supreme Court decision significantly limits the application of disparate impact in fair housing cases.
FDIC Lowers Hurdle to De Novo Formation.
On April 6, 2016 the FDIC announced that it will reduce from seven to three years the period of heightened supervisory monitoring of newly formed, or de novo, banks. This lower regulatory hurdle will help facilitate de novo formation.
Policy Statement Recognizes Unique Characteristics of Small Banks in Establishing Diversity Policies and Practices.
A final interagency policy statement recognizes the need for financial institutions to have flexibility to tailor their diversity policies and practices. As a result of ICBA’s advocacy and that of other industry groups, the policy statement acknowledges that smaller institutions and those located in remote areas face different challenges and have fewer available options.
NACHA Same Day ACH Rule Becomes Effective.
On September 23, 2016, Phase 1 of NACHA’s Same Day ACH rule went into effect, allowing for the sending and receiving of virtually any ACH credit transaction. Although sending same day transactions by financial institutions and their customers is optional, NACHA expects that many will begin enabling the origination of same day payments. ICBA’s advocacy, including our 2013 white paper, “Same Day ACH: An Opportunity for Leadership,” was instrumental in building support for the NACHA and Federal Reserve Board final rules.