Don’t count out community bank reg relief just yet
As I reached out to my community banking colleagues in Florida following Hurricane Irma — some of whom had just contacted me about my bank’s recovery from Hurricane Harvey — I realized there’s nothing a united community banking industry can’t do. While some community bankers and Washington advocates doubt the likelihood of achieving meaningful regulatory relief in the 115th Congress, the many regulatory relief measures advancing on Capitol Hill leave plenty of room for optimism.
In addition to overturning the Consumer Financial Protection Bureau’s rule restricting access to consumer arbitration agreements, policymakers have advanced several multipronged measures to relieve local institutions from excessive regulatory burdens. The House in June passed the Financial Choice Act, authored by House Financial Services Committee Chairman Jeb Hensarling, R-Texas, which contains roughly two dozen provisions offering relief from mortgage lending, call report and data collection mandates.
While the comprehensive CLEAR Relief Act continues gaining cosponsors in the House and Senate, Hensarling’s committee recently advanced a slate of more targeted pro-community bank bills — all but one of which passed on a bipartisan vote. Among them were measures to exempt low-volume community bank mortgage lenders from new Home Mortgage Disclosure Act requirements, expand community bank exemptions from escrow and servicing rules, and increase the CFPB’s exam threshold from $10 billion to $50 billion in assets.
In the Senate, recently reintroduced legislation would enhance community bank access to capital. The Community Bank Access to Capital Act of 2017, introduced by Sen. Mike Rounds, R-S.D., and co-sponsored by Sen. Roy Blunt, R-Mo., exempts more community banks from Basel III and Sarbanes-Oxley requirements, raises the consolidated asset threshold under the Federal Reserve’s Small Bank Holding Company Policy Statement from $1 billion to $5 billion, and revises the Securities and Exchange Commission’s definitions of “accredited” and “non-accredited” investors to attract new investors.
Meanwhile, senators from both sides of the aisle have expressed at least a willingness to break from the partisanship afflicting Washington to advance community bank relief. A group of Senate Banking Committee Democrats last month called on Chairman Mike Crapo, R-Idaho, and ranking member Sherrod Brown, D-Ohio, to bring before the panel a regulatory relief package for community lenders. The letter from Sens. Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota, Jon Tester of Montana and Mark Warner of Virginia cited common ground and urged bipartisan action.
Alongside this bipartisan activity, the Treasury Department has kept pressure on lawmakers with its series of reports detailing recommendations on regulatory reform. And the federal regulatory agencies have initiated regulatory relief efforts focused on community banks that go beyond their disappointing Economic Growth and Regulatory Paperwork Reduction Act reviews. Even the CFPB showed a commitment to regulatory relief by fully exempting thousands of community banks from its final rule on payday, vehicle title and certain high-cost installment loans.
As a career community banker, I share my colleagues’ frustration with policymakers’ promises of tiered and proportional regulation that too often go unfulfilled. I have seen the snail’s pace of relief from Washington time and time again. But a few short months ago, 100 community bankers gathered at the White House to discuss this issue, a show of support I had never witnessed before.
While partisanship continues to plague our nation’s capital, the almost universal support for community bank relief continues to offer a ray of hope for our overburdened industry. If we stay as engaged with our members of Congress as we do with our customers — and with each other in times of need — I remain optimistic that we will continue to achieve positive results in Washington.