Tiered regulation will allow community banks to reach their full potential without jeopardizing safety and soundness or consumer protection.
Washington, D.C. (PRWEB) September 16, 2014
The Independent Community Bankers of America® (ICBA) today called on the Senate to pass legislation that reduces the complex and suffocating regulatory burden our nation’s community banks face. Testifying before the Senate Banking Committee, President and CEO of First National Bank of Scotia, N.Y., and Chairman of ICBA, John H. Buhrmaster, said by passing such legislation, policymakers can unleash the true potential of community banks to spur economic growth and job creation in their communities.
“ICBA’s legislative and regulatory agenda is built on the principle of tiered regulation calibrated according to institutional size, business model, and risk profile,” said Buhrmaster, who is a fourth generation community banker. “Tiered regulation will allow community banks to reach their full potential without jeopardizing safety and soundness or consumer protection.”
Buhrmaster said the Senate bill that best captures the principle of tiered regulation is the “CLEAR Relief Act,” S. 1349, sponsored by Senators Jerry Moran (R-Kan.), Jon Tester (D-Mont.), and Mark Kirk (R-Ill.). With 40 bipartisan cosponsors, S. 1349 is a package of true consensus provisions. The bill would:
- Provide “qualified mortgage” 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.
- Exempt from any escrow requirements any first lien mortgage held in portfolio by a lender with less than $10 billion in assets.
- Exempt community banks with assets of less than $1 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.
- Require the Federal Reserve to revise the Small Bank Holding Company Policy Statement by increasing the qualifying asset threshold from $500 million to $5 billion.
A total of six community bank regulatory relief bills have passed the House. Most passed with broad bipartisan support and have Senate counterparts awaiting action. If scheduled, all or any one of these bills could pass the Senate with the same broad bipartisan support. Two of these bills include:
- H.R. 3329, which would raise the Federal Reserve Small Bank Holding Company Policy Statement threshold from $500 million to $1 billion, similar to the CLEAR Relief Act provision noted above.
- S. 635, which would provide relief from annual privacy notice mailings when a bank has not changed its privacy policies.
Buhrmaster said that in addition to the legislation pending before Congress, the association also has a great deal at stake in agency rulemaking. He highlighted that two weeks ago, ICBA delivered a petition to the banking agencies calling for streamlined quarterly call report filings.
“The petition was signed by nearly 15,000 bankers representing 40 percent of all community banks nationwide,” Buhrmaster said. “The quarterly call report has grown dramatically. In 2001, my bank filed a 30 page call report. Today, the call report comprises 80 pages of forms and 670 pages of instructions. A typical community bank with $500 million in assets spends close to 300 hours a year of senior level, highly-compensated staff time on the quarterly call report. Now, Basel III may add nearly 60 new pages of instructions.”
For this reason, ICBA is calling on the agencies to allow highly-rated community banks to submit a short form call report in the first and third quarters of each year. A full call report would be filed at mid-year and at year-end. The short form would contain essential data required by regulators to conduct offsite monitoring, including income, loan growth, changes in loan loss reserves, and capital position.
Buhrmaster concluded his testimony by saying that this change to the call report, together with action on community bank regulatory relief bills, would allow community banks to dedicate more resources to serving their communities and sustaining a broad-based economic recovery.
The Independent Community Bankers of America®, the nation’s voice for more than 6,500 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit http://www.icba.org.