The Independent Community Bankers of America (ICBA) has announced its top legislative and regulatory priorities for the coming year. ICBA made the announcement in Las Vegas at the 2013 National Convention and Techworld, which has attracted more than 3,300 attendees to the largest community banking industry event in the world.
“ICBA’s policy priorities are set to ensure community banks have the opportunity to support greater economic growth, job creation and prosperity nationwide,” said Bill Loving, incoming ICBA chairman and president and CEO of Pendleton Community Bank in Franklin, W. Va. “Our policy agenda is focused on minimizing the negative impact of excessive regulations, addressing the overly aggressive examination environment, minimizing risks to our financial system and creating greater economic activity and growth in local communities.”
ICBA’s top priorities for 2013 include:
►Exempting financial institutions with consolidated assets of $50 billion or less from Basel III and the standardized approach. ICBA supports strong capital requirements for all banks, but any regulatory response to the financial crisis of 2008, including any changes to the capital standards, should begin with the recognition that community banks were not the cause of that crisis. Applying these new proposed rules to community banks would drive broad industry consolidation and harm communities served by community banks.
►Expanding community bank accommodations in new Consumer Financial Protection Bureau (CFPB) mortgage-lending rules to allow them to continue serving their customers and communities. As relationship lenders that underwrite loans based on firsthand knowledge of their customers and communities and who thrive based on the strength of their reputations, community banks have every incentive to make fair, common-sense and affordable loans. They do not need burdensome, prescriptive regulations to compel them to do so.
►Exempting community banks from CFPB rules designed to address abuses in large-bank mortgage servicing. Community banks have not perpetrated abuses in servicing and should be exempt from any prescriptive rules that make servicing too costly for them. The CFPB should carefully coordinate the implementation of all the proposed mortgage rule makings to minimize the cost and impact on community banks and consumers.
►Relieving community banks from excessive regulations to allow them to support the credit needs of their customers, serve their communities and contribute to their local economies. ICBA’s Plan for Prosperity legislative platform for the 113th Congress contains a number of targeted provisions that would provide regulatory relief for community banks. ICBA urges Congress and the regulatory agencies to continue to expand and refine a tiered regulatory and supervisory system that recognizes the differences between community banks and larger, more complex institutions.
►Urging Congress to review the unwarranted federal tax subsidy of the credit union industry. ICBA continues to oppose expanded powers for credit unions, particularly the proposal to raise the cap on member business lending, as long as credit unions remain exempt from taxation and the Community Reinvestment Act. The association also opposes legislation that would allow credit unions to raise supplemental capital and, in effect, cease being exclusively member-owned cooperative entities—a condition of their original tax exemption.
►Supporting legislation that ensures greater deliberation and accountability for consumer-protection regulations. ICBA supports measures to replace single-director governance of the CFPB with a five-member commission. Additionally, the Financial Stability Oversight Council should have the power to veto CFPB rules under a more practical and realistic standard than currently exists.
►Advocating the use of consistent standards when evaluating a community bank’s fair-lending practices. ICBA opposes changes to methodologies, standards or analysis used to assess fair-lending compliance without providing proper notice to community banks. ICBA supports transparency regarding the legal theories and methodologies used when enforcing fair-lending laws, and it opposes any cause of action under the Fair Housing Act for disparate impact without a finding of intentional discrimination.
►Urging Congress to abolish the FCS or at least restrict it to its historical mission of serving the agricultural marketplace. ICBA adamantly opposes the FCS’s expansionist agenda, which would allow FCS lenders to become the equivalent of commercial banks while retaining their status as government-sponsored enterprises with its inherent tax and funding advantages. The Farm Credit Act should further define and narrowly target FCS lending activities to refocus on serving bona fide farmers and ranchers and young, beginning and small farmers and their farmer-owned cooperatives.
►Warning regulators about the impact of excessively tough safety-and-soundness and compliance exams. The overly strict exam environment can result in the unnecessary loss of earnings and capital that can have a dramatic and adverse impact on the ability of community banks to lend and support economic growth. To prevent unnecessary bank failures, examiners must exercise restraint.
►Ensuring that reforms of the housing-finance system do not disrupt the housing recovery. Community banks need the continued existence of a financially strong, reliable and impartial secondary market for residential mortgages. The housing government-sponsored enterprises, or any successor entities, must continue to be an aggregator of whole loans that do not directly compete with community banks at the retail level and must continue to permit community banks to retain mortgage servicing rights on the loans they sell.
►Advocating tax laws that promote robust economic activity and a vibrant community banking sector and foster saving and investment. ICBA will closely monitor and engage in any tax-reform debate or deficit-reduction proposals to protect community banks and secure needed tax relief. In particular, any tax reform must preserve the pass-through option, including the Subchapter S corporation.
►Supporting the restructuring of systemically dangerous financial firms to reduce the threat they pose to the financial system and the economy. ICBA backs proposals for restructuring the banking system that would restrict banks to the core activities of making loans and taking deposits and prohibit them from engaging in market making, brokerage and proprietary trading. Banking institutions with $50 billion or more in assets and systemically important nonbank financial companies (SIFIs) should be subject to enhanced prudential standards, including higher capital, leverage, liquidity standards and concentration limits and to contingent resolution plans.
►Advocating accounting and auditing standards for smaller financial institutions and businesses that do not impose costs that outweigh benefits to financial statement users. ICBA opposes any prohibitions on the ability of community banks to classify mortgage loans and investment securities at amortized cost when the intent for the bank is to collect contractual cash flows. The association supports the work of the Financial Accounting Foundation’s Private Company Council to seek recognition, measurement and disclosure alternatives for smaller private companies, including non-public community banks.