ICBA Capital Summit Lobby Issues

Digital Assets: Ensure Regulatory Frameworks Preserve Community Bank Lending

• With the GENIUS Act, Congress took the first step in restricting the payment of interest and yield by payment stablecoin issuers. As lawmakers now consider the CLARITY Act, we urge Congress to ensure a meaningful prohibition on payment of interest, yield, and “rewards” on payment stablecoins for affiliates, exchanges, and other digital asset market participants.
• A strengthened prohibition will maintain payment stablecoins’ intended purpose—payments—and help avoid a flight of FDIC-insured domestic deposits to global crypto conglomerates, which do not have the same regulatory oversight or local commitment as community banks.
• Research clearly shows that payment of yield, interest, or rewards on payment stablecoin holdings would reduce community bank deposits that support lending. Based on new macroeconomic modeling, ICBA estimates that the growth of the stablecoin market resulting from payment of yield or interest on stablecoins will significantly reduce community banks’ ability to support local lending needs. A $1.3 trillion reduction of the $4.8 trillion in total deposits held by community banks could result in an $850 billion decline in lending activity.

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Support Community Bank Formation, Growth, and Tiered Regulation

• The House and Senate have passed different versions of major housing legislation. Only the House version includes community bank regulatory relief.
• Support including “Strengthening Community Banks’ Role in Housing,” Title VI of House-passed bill, in the final House-Senate bill, The 21^st Century ROAD to Housing Act (H.R. 6644). This title passed the House on a strong bipartisan vote but was omitted from the Senate-passed version. Title VI contains community bank regulatory relief, including fewer restrictions on custodial and reciprocal deposits; an 18-month exam cycle, alternating limited-scope exams, and combined exams for well-rated banks with less than $6 billion in assets; and a pilot program to provide capital and regulatory flexibility for de novo banks, among other provisions.
• Support the Main Street Capital Access Act (H.R. 6955). This legislation, introduced by House Financial Services Committee Chairman French Hill (R-AR) and Financial Institutions Subcommittee Chairman Andy Barr (R-KY), is a package of numerous pro-community bank bills passed by the House Financial Services Committee last year. H.R. 6955 includes provisions to tailor regulations to the lower risk profile of community banks, ease excessive capital requirements, support the formation of new community banks, ensure fair reviews of agency examinations, offer capital relief at the holding company level, promote bank-fintech partnerships, and more.

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Tax Credit Unions with Assets of More Than $1 Billion

• Many of today’s credit unions are multi-billion-dollar, tax-subsidized institutions, competing in the same markets for the same customers and offering similar services as tax-paying commercial banks.
• This wasteful and outmoded tax subsidy has financed a record number of acquisitions of taxpaying community banks, reducing tax revenues for federal, state, and local governments.
• ICBA advocates for taxation of credit unions with assets of $1 billion or more. This change would raise billions in revenue and help restore a balanced and competitive financial landscape.
• ICBA’s The Illusionists campaign highlights the credit union industry’s deceptions, exponential growth, abuse of the tax code, and consumer harm. Visit creditunionsrevealed.com.

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Support for Agricultural Lending and Rural America

• A robust farm bill is vital to helping community banks sustain farmers, ranchers, and rural communities. Congress should also authorize a financial assistance package of $20 billion to $25 billion to help producers cope with adverse weather, low prices, and high input costs.
• The One Big Beautiful Bill Act strengthened commodity programs and crop insurance. The remaining “skinny farm bill” must increase USDA guaranteed farm loan limits and provide quicker loan approvals.
• ICBA opposes the Farm Credit System’s aggressive powers expansion into non-farm financing. FCS’s broad agenda includes lending to loosely defined non-farm activities such as “essential community facilities,” businesses that only tangentially serve aquaculture, investment corporations, and home mortgages in towns up to 10,000 in population.
• The FCS’s mission as a tax-advantaged government sponsored enterprise is to serve agriculture, not public and private businesses already financed by tax-paying community banks.

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Build on ACRE Success

• The One Big Beautiful Bill Act includes a 25% tax exemption for income on loans secured by agricultural land. Community banks are already using this provision to support American farmers and ranchers.
• To strengthen ACRE, ICBA seeks to broaden the law to provide more interest rate relief for borrowers and strengthen American communities.
• ICBA seeks additional, targeted tax relief to promote community bank lending and strengthen American communities.

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Repeal or Revise Small Business Loan Data Collection Mandate

• ICBA urges Congress to fully repeal Section 1071 of the Dodd-Frank Act or to reform the statute so that fewer community banks and small businesses are harmed by intrusive and overly burdensome data collection and reporting requirements.
• Support the 1071 Repeal to Protect Small Business Lending Act (H.R. 976/S. 557), sponsored by Rep. Roger Williams (R-TX) and Sen. John Kennedy (R-LA), to fully repeal Section 1071.
• Support the Small LENDER Act (H.R. 941), sponsored by Rep. French Hill (R-AR), and the PROTECTED Act (S. 2352), sponsored by Sen. Katie Britt (R-AL). Both bills would reform Section 1071 so fewer community banks and small businesses must comply.

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Oppose Credit Card Routing Mandates and Rate Caps

• Oppose the Credit Card Competition Act (S. 3623/H.R. 7035), sponsored by Sen. Roger Marshall and Rep. Lance Gooden, which would create new credit card routing mandates and force a costly overhaul of the payments landscape.
• The legislation could end credit card reward programs and reduce access to credit for consumers for the exclusive benefit of the largest merchants.
• Oppose proposals to impose a 10% rate cap on credit cards or other government price controls, which would result in reduced credit access, especially for lower- and middle-income borrowers.

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