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Bi-partisan Support for the CLEAR Act Grows!

October 14, 2013

Bi-partisan support is growing for the Community Lending Enhancement and Regulatory Relief Act (CLEAR Relief Act of 2013, H.R. 1750) with Illinois Congressman Bill Enyart (D-13th) and Aaron Schock (R-18th) recently cosponsoring this important DavisQuigleyEnyartSchock
legislation. Currently there are 65 cosponsors including Illinois Congressmen Rodney Davis (R-13th) and Mike Quigley (D-5th).

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.

  • Provides “qualified mortgage” (QM) 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.
  • Exempts from any escrow requirements any first lien mortgage held by a lender with less than $10 billion in assets.
  • Exempts servicers that service 20,000 or fewer mortgages from certain new servicing rules.
  • Provides an exemption from the independent appraisal requirement for mortgages of less than $250,000.
  • Provides that a financial institution is not required to provide an annual privacy notice to its customers if it has not changed its privacy policies.
  • Exempts community banks with assets of less than $10 billion 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.
  • Requires the SEC to conduct a cost-benefit analysis of new or amended accounting principles.
  • Requires 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 would like to thank Congressmen Davis, Quigley, Enyart, and Schock for their continued support of Illinois community banks.

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CFPB Releases Flowcharts to Navigate New Mortgage Rules

The Consumer Financial Protection Bureau has released several flow charts that offer a way to visualize how the new mortgage rules are likely to impact certain products or transactions in a variety of circumstances. (These charts are not substitutes for the regulation text and official interpretations, but they can provide an idea of where to start.)

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FHLB-Chicago and Ginnie Mae Offer New Mortgage Lending Option

September 9, 2013

The FHLB-Chicago recently announced a plan for the Bank to issue securities guaranteed by Ginnie Mae and backed by mortgages originated by member financial institutions. These MPF Government Mortgage-Backed Securities (MBS) will provide smaller institutions in particular a new option when creating mortgage products for their home buying customers. Lenders will be able to choose to retain or release servicing and will have a reliable channel for selling their loans without the low-volume hurdles originators face in today’s competitive market. READ RELEASE

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Another Compelling Case for Taxing Credit Unions

September 9, 2013

In a recent article titled, "Tax Exemption for Credit Unions: An Unjustifiable $10 Billion Tax Expenditure," Kenneth Kies and Bert Ely present yet another compelling case credit unions to pay federal corporate income taxes.

Kies and Ely argue that credit unions have grown to control a significant segment of the financial service market and have moved sharply away from their original mission; however, unlike their direct competitors they do not pay corporate income taxes. The authors find no policy or economic justification for the credit union tax break which has been estimated by the Office of Management and Budget (OMG) to cost nearly $10 billion over the next five years. Credit unions have evolved to become financial institutions which provide services identical to taxpaying competitors. In order to level the playing field, all credit unions should pay taxes. READ MORE.

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Illinois Congressmen Support the CLEAR Act

September 9, 2013

The Community Bankers Association of Illinois thanks Illinois Congressmen Rodney Davis (R-13th) and Mike Quigley (D-5th) for quigley davisstanding up in support of community bank regulatory relief.  These Illinois Congressmen have joined a bi-partisan coalition of lawmakers to co-sponsor the Community Lending Enhancement and Regulatory Relief Act (CLEAR Relief Act of 2013, HR 1750). 

Community bank’s face a regulatory burden that is completely out of proportion to their size, business model, or risk they pose to consumers or 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.

The CLEAR Act provisions include:

  • Provide QM status and escrow relief for community bank portfolio loans.
  • Increase the small services exemption threshold.
  • Create an independent appraiser exemption for loans of $250,000 or less.
  • Eliminate the annual privacy notice requirement when a bank has not changed its policies.
  • Exempt community banks (with assets less than $10 billion) from SOX 404(b) assessment and controls requirements.
  • Increase the Small Bank Holding Company asset threshold from $500 million to $5 billion.
  • Require the SEC to conduct a cost-benefit analysis regarding new or amended accounting principles.
  • Coordinate compliance with OFAC programs regarding automated clearing house funds transfers from another financial institution.

Congressmen Davis and Quigley, thank you again for your support for Illinois community banks.