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ICBA Thanks Frank and Minnick for Addressing Harsh Community Bank Exam Environment

Washington, D.C. (March 25, 2010)—The Independent Community Bankers of America (ICBA) today thanked Chairman Barney Frank (D-Mass) and Rep. Walt Minnick (D-Idaho) for sending a letter to Acting Comptroller General Gene Dodaro asking the Government Accountability Office (GAO) to assess whether federal and state banking regulators are being unreasonably conservative or arbitrary in their safety and soundness examinations and supervision of community banks. 

“ICBA thanks Chairman Frank and Rep. Minnick for recognizing that the nation’s nearly 8,000 community banks didn’t participate in the reckless practices that led to the economic crisis and for addressing the harsh exam environment that is harming Main Street community banks and the communities they serve,” said Jim MacPhee, ICBA chairman and CEO of Kalamazoo County State Bank, Schoolcraft, Mich. “Excessively tough exams that community banks face can result in potentially unnecessary loss of earnings and capital, which can have an adverse impact on the ability of community banks to lend within their communities and impair their ability to support economic growth within their community—something that is extremely counterproductive during this critical time.”

In the letter, Frank and Minnick say that one of the biggest challenges faced by community banks is how to respond to the calls from Congress and the administration to increase small-business lending to stimulate the economy, while dealing with an increasingly stringent regulatory environment that can preclude banks from doing just that.  “It is critical now more than ever that regulatory field office personnel apply a measured approach to examinations that is directed by agency leadership rather than making arbitrary decisions in the field,” the letter says. 

Frank and Minnick request the GAO to assess the impact of the current regulatory environment on commercial lending, particularly commercial real estate and small business lending.  As part of the assessment, the congressmen ask the GAO to examine if banks are being forced to write down assets, loans and Other Real Estate Owned to current “market” values, what the impact of write downs have on real estate values in general and if examiners may be discouraging community banks from the use of borrowings from the Federal Reserve, Federal Home Loan Banks or the use of CDARS reciprocal certificates of deposit.  

To view the letter, visit www.icba.org.