Regulatory Relief Agenda Moving Ahead, But Grassroots Advocacy Remains Essential
To the nation's community bankers,
As I have written before, ending the crushing regulatory burden on community banks is and has always been Job No. 1 here at ICBA. ICBA was fighting regulatory burden long before it was a “hot” issue. There’s no doubt that our industry is at a tipping point, with the weight of new regulations threatening our very livelihoods—and those of communities from coast to coast.
Fortunately for our industry and for the communities we serve, ICBA has made considerable progress in Washington this year to ease costly regulations on community banks—particularly via our Plan for Prosperity congressional platform. As ICBA Chairman Bill Loving testified before the House Financial Services Committee in April, “By rebalancing unsustainable regulatory burden, the plan will ensure that scarce capital and labor resources are used productively, not sunk into unnecessary compliance costs, allowing community banks to better focus on lending and investing that will directly improve the quality of life in our communities.”
While ICBA and community bankers nationwide are highlighting the risk, malfeasance and abuses of the too-big-to-fail financial firms as the ultimate source of many of the excessive regulatory burdens we face, we have also pursued targeted regulatory relief to lighten the load. Here’s where we are on the issues that matter most to you.
Basel III Remains at the Top of Our Agenda
Basel III is the gravest current threat to your franchises, and it remains our top priority. The dogged pushback by community banks and ICBA against initial plans to impose Basel III regulations on all banks, regardless of size, is bearing fruit. As community bankers have relentlessly pushed for an exemption from the Basel III rules, regulators continue to delay issuing a final rule. Meanwhile, pressure in Congress is growing. A series of letters from Congress, most recently a letter from a bipartisan coalition of senators, have urged regulators to focus the Basel III rules on the largest financial institutions. New legislation (S. 731) would require regulators to study the impact new rules would have, particularly on community banks, before issuing them.
New Agency Rules Reflect Advocacy Impact
Mortgage Rules. Although our job is not done and we continue to press regulators and Congress to expand community bank accommodations in Consumer Financial Protection Bureau mortgage rules, our message is getting through. New mortgage rules provide flexibility for community banks, reflecting the concerns we put before regulators. Provisions in the qualified mortgage (QM)/ability-to-repay rules that provide a legal safe harbor for QM loans and treat certain balloon-payment loans as QM, that raise the small-servicer exemption threshold, and that provide exemptions from the new escrow requirement are essential first steps for Main Street lenders, though further reforms are clearly needed and ICBA continues to push for additional changes.
Remittances. The potential impact of our industry’s voice on regulatory burdens was made abundantly clear when the CFPB reopened its final rule on remittance transfers as a result of our persistent advocacy. The CFPB issued several updates to the rule, closely tracking ICBA’s concerns and recommendations, to help smaller remittance transfer providers such as community banks continue to offer these services.
Plan for Prosperity
In addition to pushing back against agency overreach, ICBA has also made progress in advancing legislation in Congress to provide regulatory relief for community banks. Specifically, we broke out of the gate early in the 113th Congress with the Plan for Prosperity, our policy platform of targeted regulatory relief for community banks and thrifts.
The platform includes high-priority provisions to exempt community banks from new mortgage-lending rules, improve bank exam accountability, offer relief from auditing expenses, exempt community banks from proposed municipal advisor registration, provide relief from redundant privacy notice requirements, reform the CFPB’s structure and apply new Securities and Exchange Commission deregistration thresholds to thrifts.
Designed as a flexible set of legislative priorities that can be adapted to a rapidly changing regulatory and legislative environment, the plan is moving ahead in a number of legislative measures. Here are just a few of them.
The Community Lending Enhancement and Regulatory Relief Act of 2013 (H.R. 1750) and the Terminating Bailouts for Taxpayer Fairness Act of 2013 (S. 798) include a variety of Plan for Prosperity measures.
The Eliminate Privacy Notice Confusion Act (H.R. 749), which would end annual privacy notice redundancies, passed the House in March, and similar legislation has been introduced in the Senate (S. 635).
The Municipal Advisor Relief Act (S. 710) would exempt banks and bank employees from having to register as municipal advisors with the SEC, while the Municipal Advisor Oversight Improvement Act (H.R. 797) would exempt traditional banking activities from triggering the registration requirement.
The Responsible Financial Consumer Protection Regulations Act (S. 205) would replace the single CFPB director with a Senate-confirmed, five-person commission.
The Holding Company Registration Threshold Equalization Act (H.R. 801/S. 872) would allow thrift holding companies to use the new SEC shareholder deregistration threshold.
The Financial Regulatory Responsibility Act of 2013 (S. 450) would prohibit any federal financial regulatory agency from publishing a final rule if it determines that the quantified costs exceed the quantified benefits. Additionally, the SEC Regulatory Accountability Act (H.R. 1062), which passed the House on May 17, would require the SEC to determine that the benefits of any proposed regulation justify the costs before adoption.
The Financial Institutions Examination Fairness and Reform Act (H.R. 1553/S. 727) would create an ombudsman within the Federal Financial Institutions Examination Council to hear appeals of exam findings and would establish a right to appeal before an independent administrative law judge.
The Mutual Community Bank Competitive Equality Act (H.R. 1603) would allow the Office of the Comptroller of the Currency to charter mutual national banks and permit certain mutual holding companies to better raise capital.
We’re in This Together
The Plan for Prosperity has clear momentum in Congress. And it is even making headlines. There is growing interest in the topic of community bank regulatory burden among policymakers, the media and respected think tanks such as the American Enterprise Institute, which recently released a study titled, “Shuttering George Bailey.” But to get our agenda over the top, to truly allow the community banking industry to continue serving Main Street, we must renew our commitment to advocacy. It is as fundamental to our industry’s daily operations as taking deposits and making loans.
That is why community bankers from the corner office to the front line should be familiar with the Plan for Prosperity and should be ready to work with their members of Congress to see it through. We at ICBA encourage community bankers, directors, employees and friends of the industry to continue and to renew their push for these essential regulatory relief measures. As I have said before, our very future depends on it.