Despite the rancor among the presidential field leading up to Super Tuesday, there is an issue on which candidates from opposite sides of the spectrum seem to agree: the need for regulatory relief for the nation's community banks. Candidates ranging from Ted Cruz to Marco Rubio to Hillary Clinton have all voiced support for lightening the burden on smaller institutions.
Fortunately, we do not have to wait until November to act on community bank overregulation. The Independent Community Bankers of America recently released our updated platform of reasonable regulatory relief provisions that Congress can quickly pass to ease the burden and unleash credit availability at the local level. The platform focuses on regulations that inhibit access to the capital essential to community bank viability, stifle lending to mortgage borrowers and small businesses and overwhelm smaller institutions with regulatory oversight much better targeted at riskier megabanks.
ICBA's Plan for Prosperity would address the impact of the Basel III capital rules and the Volcker Rule on community banks. It seeks expanded community bank exemptions from Consumer Financial Protection Bureau mortgage restrictions to make credit available to lower-income borrowers and others having trouble accessing credit. The plan would offer mutual banks new charter options and implement tax credits to offset the government-sponsored competitive advantage enjoyed by tax-exempt credit unions and Farm Credit System lenders. And it proposes needed updates to rules on Subchapter S corporations, bank-qualified bonds, small-business data collection and Securities and Exchange Commission oversight.
Collectively, these policy prescriptions would go far toward achieving what the presidential candidates and many other policymakers say they want: community banks that can focus their resources on local lending instead of regulatory compliance. There is no question the problem of regulatory burden is real for consumers and community banks alike. ICBA's Community Bank Lending Survey released last year found that three-quarters of community bank respondents said new mortgage regulations are keeping them from making more residential mortgage loans. And the growing regulatory burden has contributed to a 32% decline in the number of community banks with under $100 million in assets — which limits access to financial services in the communities that depend on these local institutions.
The good news is that Congress has laid a foundation by enacting regulatory relief on which they should continue to build. New laws expanding the 18-month exam cycle to qualifying institutions, eliminating redundant privacy notice requirements, expanding access to CFPB rural mortgage lender benefits, and allowing thrift holding companies to take advantage of recent Securities and Exchange Commission registration thresholds — all enacted at the end of 2015 — are an important down payment on meaningful community bank relief. Meanwhile, several bills pending in Congress — including bipartisan legislation to streamline community bank call reports and a more comprehensive measure approved by the Senate Banking Committee — would expand on these successes.
The bottom line is that we don't need to count on grandiose stump speeches and campaign pledges to make a difference for Main Street banking. Community bankers nationwide already know what policy changes will have a practical impact on their ability to put a borrower in their first home or help someone start or expand their small business. In an era of tepid economic growth and too-big-to-fail institutions, allowing the community banking sector to thrive through more balanced and sensible regulation is something upon which we can all agree.
Camden R. Fine is president and CEO of the Independent Community Bankers of America.