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House Financial Services Committee Chairman Unveils Regulatory Relief Plan

House Financial Services Committee Chairman Jeb Hensarling (R-TX-05) today unveiled the Financial CHOICE Act, a bold regulatory relief plan. The proposed plan offers what Hensarling has called an “off ramp” option for banks, a separate regulatory framework, in return for maintaining higher capital levels. The bold plan also offers relief from numerous other regulatory burdens.

The CHOICE Act contains many provisions inspired by the Independent Community Bankers of America (ICBA) Plan for Prosperity. These provisions would reform the Consumer Financial Protection Bureau, ease mortgage rules on portfolio loans, require tailored banking regulations, and create a workable exam appeals process. ICBA and CBAI agree that this plan provides a welcome opportunity to advance community bank regulatory relief. Read More from Chairman Hensarling.

June 7, 2016

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Congressman Hultgren Introduces a Bill to Study Privacy Concerns of New HMDA Data

CBAI thanks Illinois Congressman Randy Hultgren (R-14) for introducing the Homeowner Information Privacy Protection Act (H.R. 4993). This bi-partisan legislation protects mortgage borrowers from exposure of their sensitive personal and financial information as a result of the new HMDA mortgage application data collection and reporting requirements. The publication of these new data fields together with real estate sales records and other publicly available information could be used to identify individual borrowers and connect them with the reported information including their credit scores and loan balances.RandyHultgren

This legislation requires the Comptroller General of the United States to conduct a study to determine if the new requirements increase the probability of exposing the identity of the mortgage applicant, identity theft, and the marketing of abusive financial products. There is also a requirement for the Comptroller General to recommend legislation or regulation to enhance consumer privacy in addition to suspending publication of the new data fields.

The Consumer Financial Protection Bureau’s new HMDA Rule, issued on October 15, 2015, will increase the number of data fields that are required to be reported on mortgage loan applications from 23 to 48. Of the 25 new fields, approximately half were added at the CFPB’s discretion. Collection of the new data begins on January 1, 2018, with reporting of the data beginning in 2019.

Community bankers take very seriously their role as guardians of their customers’ sensitive personal and financial information. CBAI believes it is bad public policy for a government agency to expose that information to computer hackers and other data thieves.

CBAI strongly supports H.R. 4993.

May 20, 2016

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Illinois Congressman Mike Quigley (D-05) Introduces Treasury Department Small Financial Institution Advisory Committee Legislation

CBAI thanks Congressman Mike Quigley (D-05) for introducing legislation which in part establishes a Treasury Department Community Bank Advisory Committee. The Mike QuigleyCommittee will provide the Department with valuable advice and guidance on a broad range of important issues impacting community banks in Illinois and throughout the country as well as the communities they serve.

CBAI Chairman Kevin Beckemeyer, president and CEO of Legence Bank in Eldorado, said, “Congressman Quigley’s legislation will ensure the voice of community banks is considered in the policy making process. As an Illinois community banker, and on behalf of Illinois community banks, we truly appreciate Congressman Quigley introducing this important legislation.”

Community bank input and guidance is vital, particularly during times of crisis, to avoid such past Treasury Department missteps as:

  • the ill-conceived implementation of the Troubled Asset Relief Program (TARP), where the Department’s actions were tragically skewed towards rescuing the failing too-big-to-fail banks while denying much needed capital funds to community banks which resulted in hundreds of their failures.
  • the urgent implementation of the Temporary Liquidity Guarantee Program (TGLP), after deposits were first guaranteed for the too-big-to-fail banks and then money market mutual funds – leaving only community bank deposits unguaranteed which risked the liquidity failures of thousands of small financial institutions;
  • and the flawed rollout of the Small Business Lending Fund (SBLF), where a separate program for subchapter “S” institutions was later required because Treasury was apparently unaware of this type of corporate structure.

The Treasury Department has the responsibility to be knowledgeable about community bank issues, problems and opportunities. The Community Bank Advisory Committee, as proposed in Congressman Quigley’s legislation, will help Treasury fulfill its important responsibilities.

April 21, 2016

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FDIC Relents on Highly Restrictive De Novo Requirements

The FDIC announced today that it is [finally] concerned about the dearth of de novo charters and is planning to revise its deposit insurance application process. FDIC Chairman Martin Gruenberg made this announcement at the FDIC Community Banking Conference and indicated their new initiatives would include an application handbook, regional points of contact for applicants, and outreach meetings with the banking industry.

The FDIC also rescinded its FIL 50-2009, Enhanced Supervisory Procedures for Newly Insured FDIC-Supervised Depository Institutions which among other measures extends the ‘de novo’ period from 3 to 7 years for examinations, capital maintenance and other requirements. CBAI welcomes this long overdue change in attitude and policy and encourages the FDIC to swiftly move forward to implement the new de novo initiatives and approve deposit insurance applications for qualified applicants.

CBAI vigorously disagrees with the FDIC’s inhibiting de novo community bank formation during the financial crisis as potential investors were directed to existing ‘problem’ banks versus new opportunities. Even in the depths of the S&L crisis (1984-1992), when 1,800 banks and savings institutions failed, an average of 196 de novos were formed annually. The FDIC approved only a handful of de novo bank charters since 2010, compared to an average of 170 new charters a year during the previous two decades.

In October of 2015, CBAI’s Vice President Federal Governmental Relations, David Schroeder, attended the Chicago’s Economic Growth and Recovery Paperwork Reduction Act (EGRRA) outreach meeting which was attended by senior banking regulators including FDIC Chairman Gruenberg. During the public comment period Schroeder stated the need for de novo bank formation to maintain a strong, growing, evolving and vibrant banking profession. CBAI fully understands the importance of prudently approving de novo charter applications but it is completely inappropriate for regulators to be practically demanding that de novo banks be failure-proof, particularly while they permit mega banks to take huge risks that are backstopped by American taxpayers. Read FDIC Press Release.

April 6, 2016

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FASB Revises CECL to Address Community Banker Concerns

The Financial Accounting Standards Board (FASB) has agreed to address community banker concerns and will revise its upcoming Current Expected Credit Loss (CECL) proposal. This important news was reported by ICBA’s Vice Chairman Timothy Zimmerman after a recent meeting of FASB’s Transition Resource Group on CECL. The revised CECL proposal will be more flexible and scalable for community banks by allowing them to evaluate and adjust the loan loss amounts using qualitative factors, historic losses, and their current systems such as spreadsheets and narratives. The revised CECL proposal is expected to be released mid-year. Community bankers must remain vigilant to ensure that the regulators and auditors who will be implementing CECL recognize the full extent of the significant concessions FASB has agreed to make. Read ICBA Release.

April 5, 2016