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Community-Bank Regulatory Relief Passes the U.S. House

This week the United States House of Representatives passed legislation to bring much-needed regulatory relief to the nation’s community banks. The Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) is a carefully constructed bipartisan bill that includes common-sense improvements to financial regulation that will allow community banks to better serve their customers and communities. For consumers it will open the door for more creditworthy borrowers and businesses, and will contribute to local economic growth and job creation. Here is what it means for your bank.

Community banks are the economic lifeblood of local communities. While holding less than 20 percent of the nation’s banking assets, community banks fund more than 60 percent of small-business loans and more than 80 percent of U.S. agricultural loans. Further, community banks operate in many areas where large banks do not, serving as the only physical banking presence in nearly one in five U.S. counties, according to the FDIC.

The 258-159 bipartisan vote in the U.S. House yesterday was preceded by a 67-31 bipartisan vote in the U.S. Senate in March. Those members of the Illinois Congressional Delegation voting in favor of this common-sense regulatory relief for community banks were: Mike Bost (R-12th), Danny Davis (D-7th), Rodney Davis (R-13th), Bill Foster (D-11th), Randy Hultgren (R-14th), Adam Kinzinger (R-16th), Darin LaHood (R-18th), Peter Roskam (R-6th), Bradley Schneider (D-10th), and John Shimkus (R-15th). The legislation is now headed to the President’s desk for his signature.

“This bipartisan vote in the House is another important step toward achieving a tiered regulatory system that appropriately differentiates between local community banks and the Wall Street megabanks. This is the best opportunity we’ve had in over a decade for meaningful regulatory relief to allow community banks to better serve their customers and communities. We look forward to the President signing this legislation into law,” said CBAI President Kraig Lounsberry.

Beneficial provisions in this legislation for community banks include:

  • Granting “Qualified Mortgage” (QM) status for portfolio mortgage loans at most community banks;
  • Increasing exemption thresholds for Home Mortgage Disclosure Act (HMDA) reporting;
  • Exempting certain community-bank loans from escrow requirements;
  • Simplifying community-bank capital requirements;
  • Increasing eligibility for a short-form Call Report to restore proportionality to quarterly reporting;
  • Expanding eligibility for the 18-month regulatory-examination cycle to more community banks;
  • Easing appraisal requirements to facilitate mortgage credit in local communities;
  • Exempting most community banks from the Volcker Rule;
  • Expanding access to the Federal Reserve’s Small Bank Holding Company Policy Statement to help more community banks build capital; and
  • Improving regulatory treatment of reciprocal deposits and certain municipal securities.

CBAI worked closely and tirelessly with both Democrats and Republicans in Congress, and the Independent Community Bankers of America (ICBA), to help to pass this important legislation which provides long-overdue, well-deserved and meaningful regulatory relief to Illinois community banks. CBAI extends its thanks to all community bankers who engaged in the grassroots lobbying process to enlighten their lawmakers and encourage their support.

May 22, 2018

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CBAI Meets with OCC’s Office of Innovation

The Community Bankers Association of Illinois' David Schroeder, Senior Vice President Federal Governmental Relations, participated in the March 21, 2018 Office of Comptroller of the Currency’s (OCC) Office of Innovation Office Hours event by meeting with senior OCC Innovation and Central District staff. The meeting was timely and very informative considering the many new developments in financial technology (fintech) which are being driven by consumer expectations. Fintech is rapidly moving into every area of financial services and it is critically important for community bankers to be aware of fintech opportunities and challenges and incorporate them into their community banks’ strategic planning.

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Topics covered during Schroeder’s meeting included the rapid rise of fintechs, how the pace of fintech development is different than prior technology developments, the different approaches taken by large versus small banks (go-it-alone or partner), opportunities for partnerships with fintechs, risk factors to consider in the development of a fintech strategy, the importance of communicating early and often with bank’s regulators, and the challenges of customer data sharing with fintechs (data ownership and rights, privacy concerns, and liability for mishandling and misuse).

Also discussed during the meeting were the recent changes in leadership in the OCC and its impact on the OCC’s fintech initiatives, the status of the lawsuit against the OCC by the Conference of State Bank Supervisors challenging the OCC’s authority to approve special purpose national bank charters for fintechs, coordination among regulators on fintech supervision and regulation, and the importance of the regulators sharing success stories or problems/issues as additional guidance for the community banks they regulate. Read OCC’s FAQs on Partnering with Fintechs.

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CBAI Action Alert: Urge Senators Durbin and Duckworth to Support Community Bank Regulatory Relief

Please Contact Senators Durbin and Duckworth Today!

The Time Is Now for Community Bank Regulatory Relief!

Only five minutes of your time is urgently needed - right now.

The United States Senate is poised to vote on significant bipartisan community bank regulatory relief - the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155). Please contact Illinois' Senator Richard Durbin and Senator Tammy Duckworth and ask them to support this critically important legislation. Take Action Now!

This bi-partisan legislation provides long-overdue, meaningful, and well-deserved community-bank regulatory relief including:

  • Granting “Qualified Mortgage” (QM) status for portfolio mortgage loans by community banks (fewer than $10 billion in assets)
  • Exempting certain community bank loans from escrow requirements (banks fewer than $10 billion in assets);
  • Increasing exemption thresholds for Home Mortgage Disclosure Act (HMDA) reporting (500 open-end and 500 closed-end loans);
  • Simplifying community-bank capital requirements (bans less than $10 billion in assets);
  • Increasing eligibility for a short-form Call Report to restore proportionality to community-bank quarterly reporting (banks fewer than $5 billion in assets);
  • Expanding eligibility for the 18-month regulatory examination cycle for community banks (banks fewer than $3 billion in assets);
  • Easing appraisal requirements to facilitate mortgage credit in local communities;
  • Exempting community banks from the Volcker Rule (banks fewer than $10 billion in assets);
  • Improving regulatory treatment of reciprocal deposits and certain municipal securities.

Please share this Action Alert with your board members and senior management.

We need a strong response from all Illinois community bankers. Take Action Now!

Thank you for responding.

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The Time is NOW for Community Bank Regulatory Relief!

This week, the United States Senate will consider a comprehensive package of community bank regulatory relief measures that has been many years in the making. The Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) is bipartisan legislation with 25 Senate cosponsors, including 12 Democrats, 12 Republicans and one Independent.

In a letter to Illinois Senators Richard Durbin and Tammy Duckworth, the Executive Committee of the Community Bankers Association of Illinois unanimously stated, “Your support for S. 2155 will strengthen Illinois community banks, promote competition in financial services, give consumers more choices, support small-business development, home and education lending, and bolster long-term financial stability and security. Community banks bear tremendous regulatory burden and cost, and the tiered regulatory relief provisions of S. 2155 are appropriately targeted to address these burdens and deliver an economic boost to small businesses and local communities.” The letter concluded by saying, “Your vote in favor of S. 2155 is a key measure of support for long-overdue, well-deserved and meaningful regulatory relief for Illinois community banks.” Read CBAI Executive Committee Letter to Senator Durbin. Read Letter to Senator Duckworth.

March 5, 2018

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State Associations Urge Passage of Regulatory Relief Legislation

CBAI joined a coalition of forty-three state banking associations to urge swift passage of the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155). This crucial legislation was introduced last November by Senate Banking Committee Chairman Mike Crapo (R-ID) and enjoys 25 bi-partisan cosponsors, including an equal number of Republicans and Democrats and the one Independent Senator. The bill passed the Senate Banking Committee on December 5th (by a vote of 16-7) and is now headed to the full Senate for consideration.

This legislation contains many provisions from the ICBA Plan for Prosperity including:

  • Granting “Qualified Mortgage” (QM) status for portfolio mortgage loans by community banks (less than $10 billion in assets);
  • Exempting certain community bank loans from escrow requirements (less than $10 billion in assets);
  • Increasing exemption thresholds for Home Mortgage Disclosure Act (HMDA) reporting (500 open-end and 500 closed-end loans);
  • Simplifying community bank capital requirements (less than $10 billion in assets);
  • Increasing eligibility for a short-form Call Report to restore proportionality to community bank quarterly reporting (less than $5 billion in assets);
  • Expanding eligibility for the 18-month regulatory examination cycle for community banks (less than $3 billion in assets);
  • Easing appraisal requirements to facilitate mortgage credit in local communities;
  • Exempting community banks from the Volcker Rule (less than $10 billion in assets);
  • Expanding community access to the Federal Reserve’s Small Bank Holding Company Policy Statement to help build capital (less than $3 billion in assets); and
  • Improving regulatory treatment of reciprocal deposits and certain municipal securities.
Recent reports have cautioned that the large banks are seeking to gain relaxed oversight once the legislation passes the Senate and moves to the House of Representatives, where they are hoping for a more sympathetic ear. Unlike the previous Senate regulatory relief bill in the 114th Congress, Senator Crapo’s bill contains no concessions to the largest banks and financial firms.

In Capital Hill meetings the week of January 15th, David Schroeder, CBAI’s Senior Vice President Federal Governmental Relations, urged every member of the Illinois Congressional Delegation to support S. 2155. The Senate’s carefully constructed bi-partisan effort has brought more and significant regulatory relief for community banks closer to realization that at any point in well over a decade. The reason this legislation has earned such strong bi-partisan support is that it is narrowly focused to provide relief to community banks. Any attempt to relax large bank supervision and regulation will jeopardize the current strong bi-partisan support and likely derail much-needed, long-overdue and well-deserved community bank regulatory relief. Read Joint State Banking Association Letter.