Main Street Matters ICBA Blog

Heading Off New Data-Collection Rules

Jul 05, 2017
800px-us_capitol_domeWith members of Congress back in their districts this week for the Independence Day recess, ICBA’s regulatory relief initiative remains in full swing. The House has passed Chairman Jeb Hensarling’s comprehensive Financial CHOICE Act regulatory relief bill, the community bank-focused CLEAR Relief Act is picking up bipartisan support in the House and Senate, and the Treasury Department has released a report advocating comprehensive community bank regulatory relief.

Two outstanding articles in The Economist detail how ICBA and community bankers are using their sterling reputation to overhaul excessive regulatory burdens and how those efforts are paying off with Treasury’s report. But our job as community banking advocates is not limited to rolling back the glut of regulations that have accumulated over many years. It is to replace our one-size-fits-all system with an order of tiered and proportionate rules appropriate to the size and risk profile of regulated institutions.

That means, in part, heading off dangerous standards before they can be implemented. And that’s precisely what we’re going to have to do with the small-business data-collection and -reporting requirements that the Consumer Financial Protection is advancing now.

The mandatory reporting requirements under Section 1071 of the Dodd-Frank Act will require community banks and other institutions to collect and report vast quantities of information regarding small-business loan applications. Think the Home Mortgage Disclosure Act for your entire small-business portfolio—it’s not pretty, is it? This paperwork burden will disproportionately harm community banks, waste critical resources and further restrict lending, while offering little benefit to regulators and the financial system.

The CFPB recently launched its process for implementing these reforms with a request for public input. ICBA will work directly with the CFPB to exempt community banks from any reporting rules it issues, and a bipartisan group of 72 members of Congress recently called on the bureau to approve a community bank exemption. Meanwhile, we are working diligently in Congress to repeal the plan’s statutory authority. Wiping out the Section 1071 authority is a core provision in ICBA’s Plan for Prosperity and is being advanced in the CHOICE Act, Rep. Blaine Luetkemeyer’s CLEAR Relief Act and legislation that will soon be reintroduced by Rep. Robert Pittenger (R-N.C.).

While ICBA continues working with Congress to advance a repeal, legislators need to hear directly from community bankers on the importance of this policy. Community bankers can do their part by using ICBA’s Be Heard grassroots website to call on their lawmakers to support the CLEAR Relief Act.

This data-collection rulemaking poses the threat of significant new burdens on community banks at a time when they are already absorbing numerous other regulatory requirements. We simply cannot allow it to further bind community banks and our local economies in additional layers of red tape.

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