Community Bank Successes Provide Year of Progress

Dec 07, 2015
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2015 Advocacy Year in Review

Community Bank Successes Provide Year of Progress


Dear Community Banker,

With the end-of-the-year congressional session well underway and the holidays quickly approaching, it’s worth pausing to consider the progress community banks have made in 2015. The year seems to have flown by rapidly since the 114th Congress took over in January, but community banks have advanced a variety of industry initiatives on Capitol Hill and at the regulatory agencies.

Thanks to the outsized reputation and influence in Washington of the nation’s community banks, ICBA and our affiliated state associations have achieved tangible results for our industry. Meanwhile, as we look ahead to the remainder of the year and the second congressional session in 2016, we remain poised to take advantage of additional opportunities for positive reform.

Fed Dividends
Most recently, ICBA and community bankers scored a major victory when Congress agreed to exempt most community banks from cuts to dividends paid on Federal Reserve Bank stock. While ICBA has adamantly opposed using the banking sector to fund federal highways since the Senate-passed plan was proposed last July, the exemption for community banks under $10 billion in assets will save the industry roughly $200 million per year, sparing many local communities from this misguided policy.

Following months of ICBA advocacy and community bank grassroots, the transportation agreement also includes a variety of beneficial regulatory relief policies from ICBA’s Plan for Prosperity. They would eliminate redundant privacy notice requirements, expand the 18-month exam cycle, ease restrictions on rural mortgage lenders, expand TruPS CDO relief for small bank holding companies, and allow thrift holding companies to take advantage of new Securities and Exchange Commission registration thresholds. The agreement also restores funds cut from the federal crop insurance program and drops ICBA-opposed language that would have extended higher Fannie Mae and Freddie Mac guarantee fees.

Accounting Update
Meanwhile, ICBA’s ongoing campaign against the Financial Accounting Standards Board’s burdensome new accounting standards has begun gaining traction. In a victory for ICBA and community banks, FASB agreed to extend the Current Expected Credit Loss implementation period to 2019-20 from 2018 or sooner after receiving more than 1,600 messages from community bankers in recent weeks.

ICBA continues leading its forceful grassroots initiative against the plan, which would require every community bank in the country to change how it accounts for loan-loss reserves. The association is pushing for members of Congress to sign onto a joint letter from Reps. Scott Tipton (R-Colo.) and Patrick Murphy (D-Fla.) opposing the new standards. And community bankers should continue reaching out to FASB in favor of ICBA’s alternative plan that would base loan-loss provisions for institutions with less than $10 billion in assets on historical losses.

Plan for Prosperity
ICBA’s comprehensive Plan for Prosperity regulatory relief platform has made progress in the 114th Congress. The House has passed numerous provisions, including relief from mortgage-lending rules, Basel III, Sarbanes-Oxley, the Volcker Rule, and examination and privacy-notice requirements, and some have passed both chambers within the transportation bill. Meanwhile, Senate Banking Committee Chairman Richard Shelby (R-Ala.) is working to advance his multipronged regulatory relief bill through the Senate by the end of the year via the legislative and appropriations processes. Community bankers can continue urging their senators to advance meaningful regulatory relief in “must pass” legislation via ICBA’s Be Heard grassroots website.

Mortgage Relief
Our regulatory relief advocacy paid off this fall with a final rule that broadens small-creditor and rural designations under the Consumer Financial Protection Bureau’s Regulation Z mortgage rules. The ICBA-advocated change will allow more community banks to receive Qualified Mortgage legal safe-harbor protection for loans they originate and retain in portfolio, including balloon-payment loans made by rural lenders. It also will provide additional relief from mandatory escrow requirements. However, ICBA continues to support legislation that would provide statutory QM safe harbor legal status and escrow exemptions for community bank portfolio loans.

Call Report
Following passionate advocacy from ICBA and community bankers, banking regulators this year issued a proposed rule to simplify community bank call reports and laid out their plans for additional reporting relief. More important than regulators’ proposal to delete certain data items and revise reporting thresholds was their pledge to evaluate a streamlined quarterly call report for community banks. This promise is a big win for community banks because it could ultimately lead to a shorter, less burdensome and more sensible call report—a key element in ICBA’s overall regulatory relief strategy.

Regulatory Representation
At the beginning of the year, community bankers wrapped up a longstanding initiative when Congress and the president finalized a law requiring the White House to appoint someone with community banking experience to the Federal Reserve Board. The law includes ICBA-advocated language that would require at least one member of the Fed board to have experience as a community banker or community bank supervisor.

Credit Unions and Farm Credit System
ICBA also has succeeded in our efforts to promote more equitable regulations on our industry’s government-sponsored competitors: credit unions and the Farm Credit System. Community bankers rallied congressional opposition to the National Credit Union Administration board’s proposed rule to relax business-lending rules for tax-exempt credit unions. Meanwhile, grassroots advocacy, including at this year’s ICBA Washington Policy Summit, has repeatedly stunted Farm Credit Administration efforts to expanded FCS powers.

Cybersecurity, Data Security
Meanwhile, the Senate this fall passed ICBA-supported legislation encouraging the public and private sectors to share critical cyber-threat information. The Cybersecurity Information Sharing Act (S. 754), which now has to be reconciled with ICBA-backed bills that already passed the House, excluded several ICBA-opposed amendments that would have weakened the bill. ICBA continues advocating the Data Security Act (S. 961/H.R. 2205), which would extend Gramm-Leach-Bliley Act-like data-protection standards, which banks already comply with, to other holders of sensitive customer information, including retailers.

Of course, that doesn’t begin to cover everything we’ve accomplished this year. ICBA and the nation’s community bankers also:
  • Achieved delayed implementation of the CFPB’s TILA-RESPA Integrated Disclosure rule and supported an additional hold-harmless period into February 2016,
  • Backed the FDIC’s plan to require larger banks to increase the Deposit Insurance Fund’s reserve ratio,
  • Attained important modifications to the FDIC’s positions on brokered deposits,
  • Pushed back against Federal Housing Finance Agency efforts to restrict access to the Federal Home Loan Banks,
  • Stopped a plan to drastically increase IRS reporting requirements for any depositor who earned any amount of interest in a calendar year,
  • Helped fast-track an extension of the Small Business Administration’s 7(a) guaranteed loan program,
  • Advocated congressional and regulatory efforts to address risks posed by too-big-to-fail megabanks,
  • Joined the Federal Reserve and NACHA in advancing same-day automated clearing house (ACH) services,
  • Strongly supported legislation to rein in the Operation Choke Point initiative,
  • Continued working to advance additional curbs on patent abuse,
  • Fought merchant attempts to increase their debit card interchange windfall,
  • Held off efforts by the U.S. Postal Service to enter the banking industry, and
  • Disputed the Supreme Court’s decision upholding the disparate-impact theory of liability.
I could keep going. As an industry, we’re going to have to. It’s already been a full year in Washington, and community banks have a lot to show for it. But we have to keep pressing policymakers to ensure the regulatory environment allows our vibrant community banking industry to continue flourishing.

With your continued support and involvement, there is no limit to what ICBA, our affiliated state associations and the community bankers of this great nation can achieve. Thank you for your partnership, and have a safe and happy holiday season.

Best wishes for success in the New Year,

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