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FOR IMMEDIATE RELEASE

ICBA: Regulatory Environment Must Promote Small-Business Lending, Economic Recovery

Washington, D.C. (February 26, 2010)—The Independent Community Bankers of America (ICBA) today told the House Financial Services and Small Business committees that our country needs to return to a more balanced regulatory environment that promotes small-business lending and economic growth. ICBA also provided a host of policy recommendations that would help community banks continue to lend.

“Our nation’s nearly 8,000 community banks support small-business lending and local economic activity not supported by Wall Street,” said Stephen G. Andrews, president and CEO of Bank of Alameda, Alameda, Calif., on behalf of ICBA. “While community banks remain committed to serving their local small businesses and commercial-real-estate customers, they confront the toughest regulatory environment in more than two decades. The banking agencies have moved the regulatory pendulum too far toward the overregulation of the community banking sector at the expense of lending.”

Andrews went on to say that as a result of capital standards above those required by regulations, questionable regulatory loan valuation and loan-loss reserve policies, and overly strict implementation of commercial-real-estate concentration guidance, many community banks are forced to avoid making loans to small-business customers that would have received loans in the past. He also said that community banks all over the country, even those located in areas that have relatively healthy economies, are under regulatory pressure to decrease commercial-real-estate concentrations. This, along with low loan demand from qualified borrowers, hinders economic growth.

ICBA made the following recommendations to Congress in order to help spur small-business lending:

  • Eliminate overaggressive regulatory examinations;
  • Extend and expand the Term Asset-Backed Securities Loan Facility program (TALF);
  • Extend Small Business Administration incentives in the American Recovery and Reinvestment Act (ARRA);
  • Restore reasonable value to Fannie Mae and Freddie Mac preferred stock and restore the dividend payments;
  • Extend the five-year net-operating-loss carryback through 2010;
  • Allow new IRAs as eligible Subchapter S Corporation shareholders and allow community bank S Corporations to issue certain preferred stock; and
  • Preserve the 35 percent top marginal tax rate on Subchapter S income.

Andrews concluded by saying that ICBA also supports the administration’s proposed Small Business Lending Fund to help increase lending to small businesses. He cautioned, however, that if there is to be broad participation by community banks, the fund should be open to the broadest number of community banks possible and be designed without the unnecessary restrictions associated with the Troubled Asset Relief Program.

To read ICBA’s testimony, visit www.icba.org.




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