ICBA Policy Resolution: Relief from Crushing Regulatory Burden


  • Community banks need regulatory relief to support the financial needs of their customers, serve their communities, and contribute to their local economies.
  • ICBA’s new regulatory platform, “Community Focus 2020: The Community Bank Agenda for Expanding Economic Opportunity.” contains targeted measures that would build upon the success of 2018’s landmark legislation, S. 2155, by rolling back onerous rules and providing additional regulatory relief for community banks.
  • ICBA urges Congress and the regulatory agencies to continue to expand and refine a tiered regulatory and supervisory system that recognizes the significant differences between community banks and large, complex institutions in terms of the risks they pose to consumers and to the financial system.
  • To preserve their original purpose, thresholds for regulatory accommodations and exemptions based on asset size and transaction volume should be continually reviewed and adjusted upward as community banks consolidate and the average asset size of banks increases.


Regulatory and paperwork requirements impose a disproportionate burden on community banks and diminish their ability to attract capital, support the financial needs of their customers, serve their communities, and contribute to their local economies. Large banks have massive, dedicated legal and compliance staff and can more easily absorb regulatory costs. Credit unions and other nonbank institutions, such as industrial loan companies and fintech companies that perform “bank-like” functions and offer comparable products and services, are not subject to the same taxation, laws and regulations as community banks. This uneven field places community banks at a competitive disadvantage and inhibits their ability to serve their customers. In addition, unreasonable regulatory requirements serve as a barrier to entry for investors who might otherwise contemplate the formation of de novo banks. Without the entry of a sufficient number of de novo banks to offset consolidation, the industry has become progressively more concentrated to the detriment of individuals, families, and small businesses.

This past year witnessed the enactment of S. 2155, the “Economic Growth, Regulatory Relief, and Consumer Protection Act.” This landmark legislation embodies many, but not all, of the provisions included in ICBA’s Plan for Prosperity (PFP), a legislative platform of community bank regulatory relief priorities. The federal banking agencies have already implemented the lion’s share of the community bank-related provisions found in S. 2155, most of which provide tiered relief based upon a bank’s size or transaction volume. The few remaining provisions, including capital simplification and short form call reports, are expected to be implemented in early 2019.

ICBA’s community bank agenda for the 116th Congress is known as the “Community Focus 2020: The Community Bank Agenda for Expanding Economic Opportunity.” It encompasses regulatory relief priorities such as suggested reforms to the Bank Secrecy Act and Anti Money Laundering (BSA/AML) statutes and changes to section 1071 of the Dodd-Frank Act which would impose HMDA-like reporting requirements for small business loan applications. It also includes a range of proposals that would create a more competitive landscape, strengthen data security, preserve and strengthen community bank mortgage lending, and provide tax relief, among other priorities.

The new 116th Congress, which was sworn in on January 3, 2019, represents a divided legislative branch where Republicans control the Senate while Democrats have assumed control of the House of Representatives. The new chairman of the House Financial Services Committee is Rep. Maxine Waters (D-CA) who is expected to pursue an agenda that includes oversight of the federal banking agencies; an increased focus upon consumer protection, hiring diversity, and affordable housing, and investigations into the activities of megabanks including Wells Fargo and Deutsche Bank. ICBA enjoys a good working relationship with Ms. Waters and her staff, and we expect to work together this year on several areas of common interest including the regulation of fintech firms, cannabis banking and megabank concentration. In the Senate, ICBA also has a good working relationship with Chairman Mike Crapo (R-ID) who will continue to lead the Senate Banking Committee. Chairman Crapo is expected to pursue an agenda which includes BSA/AML reform, data security, regulation of fintech firms, oversight regarding the implementation of S. 2155, and additional community bank regulatory relief measures.

Regarding the Executive branch, most of President Trump’s nominees have been confirmed to lead the Federal Reserve, FDIC, OCC and Consumer Financial Protection Bureau. Given difficulties associated with passing legislation in a divided legislative branch, it is widely expected that the federal banking agencies will take the lead in creating a fairer and more reasonable regulatory environment for community banks in the foreseeable future.

Staff Contacts: Brian Cooney and Chris Cole