The U.S. Senate banking reform proposal unveiled on November 16th represents the best opportunity in many years for long-awaited, meaningful, and well-deserved regulatory relief for community banks. CBAI supports this important legislation and will be engaging our members in a grass roots effort to advance the bill, advocating for its passage with the entire Illinois Congressional Delegation, and working with the Independent Community Bankers of America to address any concerns and to improve this legislation.
Although past attempts at bi-partisan regulatory reform have consistently fallen short, hope was revived this year under the leadership of new Senate Banking Committee Chairman Mike Crapo (R-Idaho). Throughout the year, the Committee has been holding hearings and taking testimony from community banks, regulators and the mid-sized banks. These hearings provided an important informational foundation and opportunities for further discussions among members of the Committee. Although talks with Ranking Member Senator Sherrod Brown (D-Ohio) reached an impasse, Chairman Crapo continued negotiations with other Democrats on the Committee. The two sides reached an agreement and released language last week. CBAI understands that the Chairman wants the bill marked-up in the normal course of business but is hopeful it will pass out of the Committee with strong bipartisan support and considered for passage in the Senate by early 2018.
The Economic Growth, Regulatory Relief and Consumer Protection Act has been described as right-sizing regulation for smaller financial institutions and includes important consumer protections for veterans, senior citizens and victims of fraud. Also, it will improve the nation’s financial regulatory framework for Main Street banks, and encouraging economic growth in local communities.
The bipartisan legislation is sponsored or co-sponsored by 10 Republicans, 9 Democrats, and one Independent. The proposal includes many provisions in the Independent Community Bankers of America’s Plan for Prosperity. These provisions include the following:
- Increase exemption thresholds for Home Mortgage Disclosure Act reporting;
- Provide “qualified mortgage” status for portfolio mortgage loans at most community banks;
- Exempt certain community bank loans from escrow requirements;
- Simplify community bank capital requirements;
- Increase eligibility for a short-form call report to restore proportionality to quarterly reporting;
- Expand eligibility for the 18-month regulatory examination cycle;
- Ease appraisal requirements to facilitate mortgage credit in local communities;
- Exempt most community banks from the Volcker Rule;
- Expand access to the Federal Reserve’s Small Bank Holding Company Policy Statement to help more community banks build capital; and
- Improve regulatory treatment of reciprocal deposits and certain municipal securities.
Although CBAI believes that the Congress can and should do more to provide real regulatory relief to the nation’s community banks, we will continue to strongly advocate and support the passage of this U.S. Senate regulatory relief bill. CBAI is urging Illinois Senators Dick Durbin and Tammy Duckworth to co-sponsor and support this meaningful reform proposal. CBAI appreciates the leadership of Chairman Crapo and all the Republican and Democrat members of the Senate Banking Committee who negotiated this common-sense proposal. See Bill. See Section-by-section Legislative Summary. See Original Announcement on the Agreement. Regulatory Relief Impact by Asset Size.
November 20, 2017