Tiered Regulation and Regulatory Relief



Updated on 08/01/2018


The Community Bankers Association of Illinois thanks President Trump for signing into law long-overdue, well-deserved and meaningful regulatory relief for 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.

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.

This legislation passed the U.S. Senate in March on a 67-31 bipartisan vote. Following Senate action, the U.S. House of Representatives passed the bill on a 258-159 bipartisan vote. Those members of the Illinois Congressional Delegation who voted in favor of this 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).

CBAI’s President Kraig Lounsberry said, “We are delighted and thankful for the strong bipartisan support this legislation received in Congress and for President Trump signing the bill into law. This was a defining vote where members chose to either stand for or against community banks.” Lounsberry continued, “We sincerely thank the Illinois Members of Congress who stood with us. Every Illinois Republican Congressman voted to pass this legislation. We particularly thank three Illinois Democrats - Congressmen Danny Davis, Bill Foster and Brad Schneider for voting to support community banks despite their party leadership’s unjustified opposition to the passage of this legislation.”

The next step is the regulators implementing these beneficial provisions of this legislation.

  • 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 enact this important legislation into law.

CBAI extends its thanks to all community bankers who engaged in the grassroots lobbying process to enlighten their lawmakers and encourage their support.


CBAI is hopeful that Congress and the Trump Administration will support the passage of additional meaningful regulatory relief for community banks. The continuing decline in the number of community banks combined with an increased concentration of banking assets in the mega banks pose a threat to our financial system and economy. Community banks are continuing to suffocate under an unprecedented regulatory burden which has driven many small banks to merge out of existence. Dealing with the increased regulatory burden is diverting scarce community bankers’ resources from serving their customers and communities to new compliance requirements, reviews and documentation.

The financial crisis demonstrated that the risks taken by Wall Street are very different from those taken by community banks, and regulations should reflect those differences. The regulatory burden imposed on community banks by a one-size-fits-all approach ignores the disproportionate burden of banking laws and regulations on community banks. Credit unions, Farm Credit System lenders and other non-bank financial services providers are not subject to the same laws and regulations as community banks. This unlevel playing field places community banks at a significant competitive disadvantage.

CBAI supports the ICBA’s Plan for Prosperity, a policy platform for the 115th Congress that promotes a regulatory environment in which community banks can thrive and contribute to their local economies. The Plan addresses the following issues to help community banks dedicate more of their resources to promoting economic growth: access to capital, regulatory relief, mortgage reform, bank oversight and examination, tax relief, and agricultural and rural America priorities.

CBAI urges Congress and regulators to expand and refine a tiered regulatory system based on bank size and risk profile to ensure that every law, rule and regulation clearly distinguishes and appropriately regulate community banks.


Report on CBAI Staff Visit to D.C.

CBAI’s Call on Washington

CBAI’s Capital Conference

ICBA’s Plan for Prosperity

Legislative and Regulatory Successes