August 15, 2014
Bipartisan and bicameral support is growing for the Community Lending Enhancement and Regulatory Relief Act (CLEAR Relief Act of 2013, H.R. 1750/S. 1349) with Congresswoman Tammy Duckworth (D-8th) recently cosponsoring this important legislation. Currently the CLEAR Act has 38 cosponsors in the Senate and 172 cosponsors in the House.
Community banks face a regulatory burden that is completely out of proportion to their size, business model, and risks they pose to the financial system. Regulations disproportionally burden community banks because they cannot spread these costs over a large number of customers. Targeted and sensible regulatory relief will allow community banks to better serve their customers and communities.
This CLEAR Act included the following important provisions.
- Providing “qualified mortgage” status under the CFPB’s ability-to-repay rules for any mortgage originated and held in portfolio for at least three years by a lender with less than $10 billion in assets.
- Exempting from any escrow requirements any first lien mortgage held by a lender with less than $10 billion in assets.
- Exempting servicers that service 20,000 or fewer mortgages from certain new servicing rules.
- Providing an exemption from the independent appraisal requirement for mortgages of less than $250,000.
- Providing that a financial institution is not required to provide an annual privacy notice to its customers if it has not changed its privacy policies (House version only).
- Exempting community banks with assets of less than $10 billion ($1 billion in Senate version) from the Sarbanes-Oxley 404(b) internal-controls assessment mandates. The exemption threshold would be adjusted annually to account for any growth in banking assets.
- Requiring the SEC to conduct a cost-benefit analysis of new or amended accounting principles (House version only).
- Requiring the Federal Reserve to revise the Small Bank Holding Company Policy Statement by increasing the qualifying asset threshold from $500 million to $5 billion.
CBAI thanks Senator Kirk and Congressman Rodney Davis, Bill Enyart, Aaron Schock, Bobby Rush, John Shimkus, Randy Hultgren, and Adam Kinzinger and Tammy Duckworth for your support for Illinois’ community banks.