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Last update: 09/01/14

ICBA News Release

ICBA Independent Community Bankers of America

Media Contact
Aleis Stokes
(202) 821-4457

Media Contact
Ann Chen 
(202) 821-4346

FOR IMMEDIATE RELEASE

ICBA Announces 2011 Policy Priorities

San Diego, Calif. (March 22, 2011)-The Independent Community Bankers of America (ICBA) today announced its top legislative and regulatory priorities for the coming year. ICBA made the announcement in San Diego at the 2011 National Convention and Techworld, which attracted nearly 3,000 attendees and is the largest community banking industry event in the world. 

"Now more than ever, community banks are America's financial foundation," said Salvatore Marranca, incoming ICBA chairman and president and CEO of Cattaraugus County Bank, Little Valley, N.Y. "ICBA's 2011 policy priorities address the needs of Main Street community banks and their customers.  As the regulations come out of the Dodd-Frank Wall Street Reform legislation, ICBA will push for a fair and balanced approach that doesn't harm community banks and their customers.  We will work with regulators to put a hard stop on overly harsh and burdensome exams, support legislation that halts the Fed's proposed rule on debit interchange, and work to ensure a financially strong, impartial secondary mortgage market that allows community banks to lend to their local customers."

In addition to working on behalf of Main Street as the regulatory agencies work to write the 243 rules from Dodd-Frank, ICBA's top priorities for 2011 are:

  • Opposing the Federal Reserve's flawed debit interchange price-fixing proposal, which advantages big box retailers at the expense of community banks and their customers. A well-functioning and balanced payment card interchange system provides tremendous benefit for community banks, their customers and merchants of all sizes. ICBA is steadfastly working on the legislative and regulatory fronts to blunt the damage this defective law and proposed rule will inflict on Main Street. A dual-interchange system based on the asset size of the issuer does not work in the market and will not shield community banks and their customers from the negative impact of debit card interchange price-fixing.
  • Ensuring that the new Consumer Financial Protection Bureau (CFPB) is focused on the true source of risk to consumers-the shadow banking industry. Any new rules promulgated by the CFPB must provide community banks the flexibility to meet the unique needs of their customers and not burden community banks with additional and unnecessary requirements that could prevent them from serving their communities. Prudential banking regulators should actively participate in the consumer protection rule-writing process. All financial firms that grant credit should be subject to robust supervision and examination, as community banks have long been. ICBA supports a broad definition of non-depository "covered persons" subject to CFPB rules, examination and enforcement. The CFPB must also use its authority to grant broad relief to community banks and/or community bank products where appropriate.
  • Supporting housing finance reform that doesn't disrupt the fragile economic recovery. Community banks need the continued existence of an impartial secondary market for residential mortgages that is financially strong and reliable. The housing Government Sponsored Enterprises (GSEs), or any successor entities, must not directly compete with the private sector at the retail level, and all lenders should have equitable access to the secondary market regardless of size or volume. The secondary market entities must have a limited mission focused solely on supporting residential and multifamily housing in all communities. ICBA's preferred option for secondary mortgage market reform involves replacing Fannie Mae and Freddie Mac with privately capitalized cooperatives that are owned by industry and have an appropriate level of government support and oversight to ensure stability and market liquidity.
  • Supporting common-sense lending. Proposals to deal with abusive and predatory lending practices should focus on loans that have less than prudent underwriting standards and that are sold on the secondary market and should not prohibit the responsible loan products created to meet the diverse needs of consumers, such as lower-income borrowers, borrowers in rural communities, or first-time homebuyers. These products help community banks meet credit needs and support economic development. Furthermore, the regulatory agencies should use their statutory exemption authority, as provided under the Dodd-Frank Act, to exempt community bank mortgage loans, such as loans provided to rural and underserved areas and mortgage loans held in portfolio, from unnecessary regulatory requirements.Truth in Lending Act (TILA) disclosures should be integrated with the mortgage disclosures required by the Real Estate Settlement Procedures Act (RESPA). Finally, ICBA strongly urges the regulatory agencies not to define "qualified residential mortgage" so stringently that community banks will be driven from the residential mortgage market, enabling only a few of the largest lenders to operate in it. Too narrow a definition will also severely limit credit availability to borrowers who do not have significant down payments or who, despite high net worth, have relatively low income and high debt-to-income ratios.
  • Moderating the overzealous exam environment to better enable community banks to lend and aid economic recovery. Excessively tough community bank exams result in unnecessary loss of earnings and capital, which impacts the ability of community banks to lend and impairs their ability to support economic growth within their local communities. To prevent unnecessary bank failures, examiners must exercise restraint. Examiners should also take a longer-term view of commercial real estate holdings and not demand aggressive write-downs and reclassifications of loans based on forced sale values of real estate during illiquid or dysfunctional markets.
  • Opposing the Financial Accounting Standards Board's (FASB) fair value accounting proposal, which would distort the operations of community banks. While FASB announced it reversed its position promoting full fair value for financial instruments, this is only a start towards addressing all aspects of its Financial Instrument project that are of concern to community banks. Accounting standards and guidance should not be pro-cyclical, and financial institutions should have flexibility in setting loan-loss allowances to prepare for bad economic times. Community banks oppose FASB's move to create a new statement of comprehensive income. As accounting standards are developed, provisions should be made for smaller financial institutions and businesses so that the cost of implementing the standards does not outweigh their benefit.
  • Advocating for tax reforms that promote robust economic activity, a vibrant community banking sector and foster saving and investment. Lower tax rates for individual income and for Subchapter S income, dividends and capital gains that are set to expire in 2012 should be extended or made permanent. Tax policy should foster greater savings and bank liquidity, including tax-advantaged savings accounts and CDs. ICBA opposes new bank-specific fees or tax levies targeting the financial services sector. Public policy should support community banks' ability to raise capital, including favorable implementation of the Treasury Small Business Lending Fund.
  • Advocating provisions found in the Communities First Act (CFA) legislation that would mitigate the disproportionate regulatory and tax burdens imposed on community banks, their customers and their communities. The Financial Services Regulatory Relief Act of 2006 and other recent laws provided a welcome down payment on needed regulatory relief for community banks. Congress should enact additional regulatory relief proposals identified by the industry and bank regulators.
  • Ensuring community banks retain the ability to offer a variety of overdraft coverage services. Consumers should be fully informed about the terms, conditions and choices relating to their overdraft coverage program. Any legislation or regulation must distinguish between discretionary overdraft coverage and automated overdraft programs. Discretionary programs, in which bank staff evaluates overdrafts on a case-by-case basis, are services that customers expect from their local banker and should not be subject to the same rules and limitations as automated programs. Any new legislation or regulation must not impose fee restrictions, caps or price controls or dictate unnecessary customer contact requirements in the event of repeated overdrafts.
  • Ensuring that the too-big-to-fail provisions of the Dodd-Frank Wall Street Reform Act are effectively implemented in order to create a level playing field. To reduce systemic risk, the too-big-to-fail institutions must be subject to higher leverage and risk-based capital requirements than other institutions. ICBA remains very concerned about implementing any type of bifurcated risk-based capital framework that may disadvantage community banks relative to other-sized financial institutions. ICBA generally supports Basel III and the proposed Basel II Standardized Framework and believes the banking agencies should reappraise the Basel II Advanced Approaches. Community banks should also have the option to remain under the existing Basel I framework to reduce regulatory burden.
  • Keeping the Farm Credit System (FCS) focused on agricultural lending. ICBA adamantly opposes the FCS's expansionist agenda, which would allow FCS lenders to become the equivalent of commercial banks while retaining their GSE status with its inherent tax and funding advantages. FCS lenders should be subject to taxation when they exceed a given asset threshold and for loans to large borrowers or any non-farm lending activities. ICBA also opposes the Farm Credit Administration's "Rural Community Investments" proposal. The FCS should face equal regulatory safeguards, disclosures and controls as community banks and the housing GSEs, including equal oversight by the CFPB.
  • Opposing expanded powers for credit unions, particularly the proposal to raise the cap on "member business loans," and urging Congress to end credit unions' unfair and unjustified tax exemption. Exempting credit unions from federal taxation is no longer justified, especially in today's economic climate, and ICBA urges Congress to review this long-overlooked and unwarranted federal tax subsidy. At a minimum, credit unions with assets of more than $1 billion should be subject to federal taxation. ICBA supports applying Community Reinvestment Act requirements to credit unions comparable to and with the same asset-size distinctions as banks and thrifts. ICBA supports the right of a financial institution to choose the type of charter under which it operates and encourages credit unions seeking bank-like powers to convert to bank or thrift charters.

For more information, visit www.icba.org.






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