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.