CBAI's SVP Federal Governmental Relations, David Schroeder, was in Washington D.C. the week of November 11th to update the Illinois Congressional Delegation on important issues for Illinois community banks. Schroder also met with; the Office of the Controller of the Currency; the Consumer Financial Protection Bureau’s leadership team responsible for implementing Section 1071 of the Dodd-Frank Act (small business data collection); Bryan Schneider (the former Director of the Illinois Department of Financial and Professional Regulation) in his new position as the CFPB’s Associate Director of Supervision, Enforcement, and Fair Lending; and senior legislative and regulatory staff of the Independent Community Bankers of America (ICBA).
Again, topping the discussion agenda was credit union abuse, particularly the acquisition of tax paying community banks by tax-exempt credit unions. These acquisitions are just the latest example of credit unions straying far from their founding mission of serving individuals of modest means and with a common bond. Schroeder highlighted a new report from the independent Tax Foundation which stated that the credit union tax exemption cannot be justified on the grounds of sound tax policy and its repeal would make the tax code more equitable. This and many other studies and findings challenge the very reasons behind the credit union tax exemption. Credit unions can’t have it both ways and there must be consequences for their actions.
Schroeder also discussed the Federal Reserve Board’s recent decision to develop its FedNow (real-time payments) Service which affirms the important role the Fed has and must continue to play in the nation’s payments system. This historic decision ensures bank choice, increased competition, the widest possible adoption (ubiquity), lower costs, essential checks and balances, beneficial and creative innovation, reduced concentrations in financial services, and crucial redundancy (no single point of failure) in times of crisis. Schroeder stated that these positive outcomes for community banks, consumers, small businesses, the financial system, our economy and American taxpayers can only be achieved by the Fed’s operating its FedNow Service.
CBAI has strongly advocated for this Fed decision during Hill meetings for almost two years. We were particular pleased that in a House Budget Committee meeting, during Schroeder’s D.C. visit, Illinois Congresswoman Jan Schakowsky (D- 9th) questioned the Federal Reserve Board Chairman (Jerome Powell) about the too-long implementation timeline for the FedNow Service. CBAI continues to stress the importance of launching a feature-rich service as soon as possible to provide community banks with a valuable service to offer their customers.
Finally, while community bankers were greatly encouraged by the passage and implementation of the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155), Schroeder encouraged additional accomplishments to reverse the trend of losing one community bank a day to consolidation, which when combined with an increased concentration of banking assets in the largest banks and non-banks, poses a pernicious threat to our financial system and economy.