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ICBA Urges Congress to Address Overly Strict Regulatory Environment

Washington, D.C. (June 15, 2011)-The Independent Community Bankers of America (ICBA) today continued its call for Congress to enact legislation to address the overly stringent regulatory environment. ICBA Chairman and President and CEO of Cattaraugus County Bank in Little Valley, N.Y., Sal Marranca told Congress that many bank examiners have overreacted to the recent financial crisis and are stunting small-business lending and the economic recovery on Main Street.

"The pendulum has swung too far in the direction of over-regulation," Marranca said in testimony before the Senate Banking Subcommittee on Financial Institutions and Consumer Protection. "I've met with thousands of community bankers from every part of the country in recent years, and I can tell you there is an unmistakable trend toward arbitrary, micromanaged and unreasonably harsh examinations that are suffocating lending."

In his testimony, Marranca advocated several legislative measures designed to reduce undue regulatory burdens on community banks to promote the recovery. Marranca expressed strong support for the Communities First Act (H.R.1697), which is sponsored by Rep. Blaine Luetkemeyer (R-Mo.). The measure would raise the threshold number of bank shareholders that triggers Securities and Exchange Commission registration from 500 to 2,000 and extend the five-year net-operating-loss carryback provision to free up community bank capital, among other provisions to address onerous over-regulation and to encourage greater saving, investing and lending.

Also, ICBA supports the Common Sense Economic Recovery Act of 2011 (H.R. 1723). This measure, sponsored by Rep. Bill Posey (R-Fla.), would bring more consistency to the examination process by preventing federal banking regulators from assigning non-accrual status to performing loans. This would provide for more consistent classifications and keep examiners from arbitrarily penalizing community banks for working constructively with borrowers.

In addition, Marranca encouraged the passage of H.R. 1315, sponsored by Rep. Sean Duffy (R-Wis.), to enhance Financial Stability Oversight Council review of Consumer Financial Protection Bureau rules; called for regulators to effectively implement Dodd-Frank restrictions on the largest and riskiest financial institutions; and warned policymakers to carefully proceed with housing-finance reforms to avoid industry consolidation.

For more information and to read Marranca's testimony, please contact Aleis Stokes at (202) 821-4457 or visit http://www.icba.org/