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ICBA Announces 2012 Community Banking Policy Priorities

Nashville, Tenn. (March 13, 2012)—The Independent Community Bankers of America (ICBA) today announced its top legislative and regulatory priorities for the coming year. ICBA made the announcement in Nashville at the 2012 National Convention and Techworld, which attracted more than 3,000 attendees and is the largest community banking industry event in the world.

“Our nation’s more than 7,000 community banks continue to be prolific small businesses lenders and job creators, boosting economic growth in local communities nationwide,” said Jeff Gerhart, incoming ICBA chairman and chairman of Bank of Newman Grove, Neb. “ICBA’s 2012 policy priorities address the needs of Main Street community banks and their customers by supporting key policies that promote much-needed regulatory relief for community banks, address the suffocating examination environment, extend FDIC coverage of transaction accounts and stop the tax-exempt credit unions’ unfair push to expand into prohibited commercial lending—at the expense of taxpaying community banks.”

ICBA’s top priorities for 2012 include:


  • Pursuing enactment of the Communities First Act (H.R. 1697 and S. 1600), which provides much-needed regulatory and tax relief for community banks, their customers and their communities. The Communities First Act would allow community banks to continue to lend locally and help boost the economy by providing appropriate tiering of regulation and providing relief for smaller, low-risk institutions. The legislation contains 26 tax- and regulatory-reform provisions that would benefit local economies and have a positive impact for community banks and their customers.


  • Urging Congress to address the unfair tax and regulatory disparity between taxpaying community banks and tax-exempt credit unions, while opposing further credit union “mission creep.” Bank-like credit unions should be subject to the same laws and regulations as banks, including taxation and compliance with the Community Reinvestment Act. Large, multi-bond and geographic-based credit unions have exceeded their statutory tax-exempt mission and unfairly use their large taxpayer subsidy to compete with taxpaying community banks. At a time of record federal budget deficits, every dollar of revenue counts. ICBA also vigorously opposes legislation to expand commercial lending powers of credit unions. Of the nation’s 7,300 credit unions, only 162 are at or near the current cap. Furthermore, Small Business Administration loans, as well as any small business loans of $50,000 or less, are exempt from the cap. There is ample capacity for the 98 percent of credit unions below the federally mandated cap to expand their lending with no change to current law if they choose to do so.


  • Urging Congress to extend full insurance on noninterest-bearing transaction accounts once the temporary coverage expires on Dec. 31. This important coverage was established to support bank liquidity and stability and prevent any sudden withdrawal of deposits, which potentially could destabilize the entire banking system. It also ensures that small business, municipal and other transaction accounts are adequately protected. Congress must act soon to continue full FDIC coverage for noninterest-bearing transaction accounts for an additional five years. Leaving this important insurance issue unaddressed would harm Main Street communities and small businesses and create disruptive uncertainty in an already fragile banking system. More than $1.4 trillion in deposits are now insured by this bank-funded insurance. Congress must act this year to extend it.


  • Encouraging the Consumer Financial Protection Bureau (CFPB) to provide community banks a safe harbor for “qualified mortgages” for the “ability to repay” requirements mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. ICBA also encourages the regulatory agencies not to define “qualified residential mortgage” under the credit risk retention rules of Dodd-Frank so stringently that community banks would no longer have the ability to structure loan terms that fit a qualified borrower’s unique financial situation. Too narrow a definition will severely limit credit availability to many creditworthy borrowers who do not have significant down payments, have seasonal incomes or face other unique situations that fall outside of secondary market guidelines. Community banks need to retain the flexibility to serve these borrowers.


  • Continuing to warn regulators that excessively tough exams that result in potentially unnecessary loss of earnings and capital can have a dramatic and adverse impact on the ability of community banks to lend and therefore impair their ability to support economic growth. To prevent unnecessary bank failures, the examiners must exercise some restraint. ICBA resists efforts by the regulators to impose hard concentration limits on any type of lending. Examiners should take a longer-term view of real estate held by banks as collateral for loans and should not demand aggressive write-downs and reclassifications of loans based on forced sale values of real estate during illiquid or dysfunctional markets. ICBA supports legislation that would reform the appellate process for agency decisions or actions and that would allow bankers to appeal to an independent council or ombudsman office an adverse determination made by an examiner in an exam report.


  • Ensuring that any new rules promulgated by the CFPB provide community banks the flexibility to meet the unique needs of their customers and do not burden community banks with additional and unnecessary regulatory requirements that could prevent them from serving their communities. ICBA also supports legislation that would replace single-director governance of the CFPB with a five-member commission. Prudential banking regulators should actively participate in the consumer protection rule-writing process. The Financial Stability Oversight Council should have the power to veto CFPB rules under a more practical and realistic standard than currently exists. ICBA firmly believes that the focus of any enhanced regulation of consumer financial products should be on the unregulated “shadow” financial industry. The CFPB must use its authority to exempt any class of providers or any products or services from the rules it writes to grant broad relief to community banks and their products where appropriate.


  • Promoting tax laws that spur robust economic activity and a vibrant community banking sector while fostering saving and investment. ICBA opposes new bank-specific fees or punitive new tax levies and transaction taxes specifically targeting the financial services sector. ICBA also advocates for the net operating loss five-year carryback to be extended or made permanent for all community banks. Public policy should support community banks’ ability to raise capital, including allowing Subchapter S Corporation banks to issue preferred stock, increasing their shareholder limits, and allowing new IRA shareholder investments. Tax policy should also foster greater savings and bank liquidity, including tax-advantaged savings accounts and CDs.

For more information, visit http://www.icba.org.