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ICBA Asks Congress to Help Lift Smothering Banking Regulations

Washington, D.C. (May 12, 2004) - Congress must play a role in reducing the increasing regulatory burden that is seriously hindering community banks from doing what they do best: Serving as engines to the nation's local economies.

That's the message the Independent Community Bankers of America (ICBA) brought to Capitol Hill today during a hearing before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit.

ICBA Chairman Dale L. Leighty, president and chairman of First National Bank of Las Animas, Colo., testified that efforts by the federal banking agencies to cut unnecessary and inefficient regulations smothering community banks can't completely fix the problem. "Many regulatory requirements are hard-wired in federal statute," he said. "Therefore, effective reduction of regulatory burden will require congressional action."

Leighty highlighted examples of more than a dozen banking laws that inundate community banks with unproductive requirements for disclosure, reporting, and paperwork-requirements that neither serve consumers nor make banks safer. He also cited statistics showing the disproportionate burden regulations impose on community banks.

"There is not any one regulation that community banks are unable to comply with-it is the cumulative effect of all the regulations that is so burdensome," he said. "Each rule has certain fixed costs associated with it. A mega bank with thousands of employees can more easily absorb those costs and devote the resources to addressing the new rule. For a small community bank, the requirements are snowing them under."

ICBA recommends adopting a more tiered regulatory and supervisory structure that accommodates the differences between community banks and larger, more complex institutions. The trade association also supports shifting the disproportionate burden of supervisory and regulatory resources away from community banks and toward larger institutions that present the most potential risk to the financial system.

ICBA will offer detailed recommendations to Congress in the near future to reduce the regulatory burden of community banks, Leighty said.

The full text of Leighty's testimony is available on ICBA's website at www.icba.org.