FOR IMMEDIATE RELEASE
ICBA-Backed Communities First Act Introduced by Rep. Ryun
Washington, D.C. (May 3, 2005) - The Communities First Act, ICBA-backed legislation designed to help local financial institutions better serve the needs of their communities by providing badly needed regulatory relief and tax reform, was introduced today by Rep. Jim Ryun (R-Kan.), a senior member of the House Financial Services Committee.
"Our members are excited about this proposal because it will benefit consumers, small businesses, local governments and others who depend on community banks for financial support," said David E. Hayes, chairman of the Independent Community Bankers of America (ICBA) and the president of Security Bank in Dyersburg, Tenn. "By lifting the yoke of regulatory burden off their backs, and moving them closer to tax parity with tax-exempt credit unions, community banks can focus their resources on better serving their customers. All community bankers owe a debt of gratitude to Rep. Ryun for sponsoring this bold initiative."
The bill, entitled "Community Banks Serving Their Communities First Act," provides targeted regulatory relief for community banks, as well as tax reform for community banks and their customers. Included in the bill's regulatory relief sections are provisions to:
- Direct the Federal Reserve to provide greater leeway for bank borrowers to waive the three-day right of rescission so they can access their loan funds more quickly;
- Permit regulators to adjust the examination intervals for qualified banks with up to $1 billion in assets;
- Exempt banks with up to $5 billion in assets from the costly internal control and attestation and audit requirements of the Sarbanes-Oxley Act;
- Permit qualified banks with up to $1 billion in assets to file a short-form call report in two quarters each year; and
The bill also includes tax reform provisions to:
- Defer recognition of interest income on long-term certificates of deposit, and reduce the top rate;
- Allow a 20 percent tax credit for Subchapter C corporation banks and bank holding companies up to a maximum credit of $250,000 per year. Subchapter S corporation banks could exclude 20 percent of distributable income not to exceed $1.25 million of income;
- Provide qualified community banks and bank holding companies in distressed areas with a 50 percent tax credit. The credit for C corporation banks could not exceed $500,000, and S corporation banks would be able to exclude 50 percent of income up to $2.5 million of income.
- Repeal the Alternative Minimum Tax (AMT) for banks with up to $5 billion in assets; and
- Exempt from taxation income earned on agricultural real estate loans and mortgage loans in communities of 2,500 people or less.
ICBA President and CEO Camden R. Fine said: "Community banks today compete on an uneven playing field, and their customers are paying the price for it. This legislation is a small but important step towards closing the tax and regulatory gap with tax-exempt and lightly regulated credit unions and farm credit agencies."
Fine added: "This bill is a win-win for our nation's community banks and their customers and communities, and we urge all community banks to get behind this important legislative initiative."
The Communities First Act was endorsed by Rep. Spencer Bachus (R-Ala.), chairman of the House Financial Institutions and Consumer Credit Subcommittee. "This bill will allow our community banks to devote more resources to the business of lending to consumers and less to the bureaucratic maze of compliance with outdated and unneeded regulations," Bachus said. "Reducing onerous regulatory burdens will lower the costs of credit to consumers and help our economy. Congress needs to recognize that community banks need relief if they are to continue to provide excellent service to their communities."