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ICBA Recommends Changes to Wall Street Reform Act

Tells Congress to Minimize Impact on Main Street Communities

Washington, D.C. (March 2, 2011)- The Independent Community Bankers of America (ICBA) today provided recommended changes to the Wall Street Reform Act to minimize the law's adverse impact on Main Street communities and to prevent placing a disproportional burden on community banks. In its testimony, the association again asked Congress to stop the Federal Reserve's proposed rule to implement a provision in the law that imposes government price fixing of debit card interchange fees, which would result in higher costs and fewer services for community bank customers.

"The new law and the Federal Reserve proposal threaten the ability of community banks to compete with large issuers and would bring about further industry consolidation, to the detriment of consumers and small businesses throughout the nation," said Jim MacPhee, ICBA chairman and CEO of Kalamazoo County State Bank in Schoolcraft, Mich., at a House Financial Services Subcommittee on Financial Institutions and Consumer Credit hearing. "Preventing this misguided proposal from taking effect will ensure that Americans continue to receive the services they expect from the nation's Main Street community banks."

MacPhee made the following ICBA recommendations to avoid excessive regulatory burdens and to ensure that community banks can continue to offer a variety of financial products and services to their customers:

  • Prudential bank regulators should have a greater role in developing Consumer Financial Protection Bureau regulations.
  • The Consumer Financial Protection Bureau should continue to reach out to community banks as it develops new rules to better understand how they will affect community bank customers.
  • Regulators should not define "qualified residential mortgage" too narrowly, which could drive thousands of community banks and other lenders from the residential mortgage market.
  • Regulators should exempt portfolio loans held by banks with assets of less than $10 billion from a new requirement that first lien mortgage lenders establish escrow accounts for the payment of taxes and insurance.
  • Congress should reintroduce the use of credit ratings, but authorize regulators to confirm the credit ratings when additional credit analysis is warranted.
  • New regulations should not disadvantage community bankers' use of derivatives.

MacPhee also expressed ICBA support for provisions in the act that provide for tiered regulation of the banking industry, subject too-big-to-fail financial institutions to stricter regulatory standards, impose new regulations on the "shadow" banking industry and base the deposit insurance assessment base on assets instead of deposits.

To read MacPhee's testimony, visit the ICBA website at http://www.icba.org/.