State Community Bankers Association Joins Basel III Chorus
Along with the FDIC's Thomas Hoenig and Sheila Bair and Bank of England's Andrew Haldane, the Executive Council of State Community Bankers Association added their support to exempt community banks from the Basel III capital proposals.
"The community banking industry is overwhelmed by government regulation, and this proposal unnecessarily piles on additional regulatory burdens," they wrote. "Ultimately, these burdens will lead to higher borrowing costs and diminished availability of both credit and bank services to consumers, small businesses, and local governments."
ICBA continues calling on community bankers to submit comment letters and sign its petition on Basel III regulatory capital guidelines before the Oct. 22 comment deadline. Guidelines for drafting a comment letter, including a template and insertable talking points, can be found on the ICBA website. ICBA also continues to call on community bankers to sign its petition urging regulators to exempt community banks from the Basel III proposals.

Sign ICBA’s Basel III Petition.
Send in a Comment Letter.

ICBA Backs Broader Exemptions from Mortgage-Servicing Proposals
ICBA called on the Consumer Financial Protection Bureau to exempt small mortgage servicers from proposed servicing rules. In a comment letter to the bureau, ICBA advocated exempting servicers that service 10,000 or fewer mortgage loans from a proposed rule that would require more burdensome monthly mortgage statements. ICBA wrote that the bureau’s proposed threshold of 1,000 loans is too low to provide any real relief for community bank mortgage servicers.

The association also urged the CFPB to drop proposed changes to adjustable-rate mortgage notices. Under the proposed rule, servicers would be required to send borrowers an estimate of their initial adjustment six months before a rate change takes effect. ICBA wrote that this estimate will confuse borrowers and provide inaccurate information. ICBA also urged the bureau not to require additional changes to the timing of ARM adjustment notices because these changes are not required by statute, provide no value to consumers and would be costly to implement.

Finally, ICBA asked the CFPB to provide clear guidance to the prudential banking regulators to accept community banks’ current processes and procedures for complying with the proposed rules regarding error resolution, continuity of contact, prompt crediting of payments, loss mitigation and early intervention, force-place insurance and reasonable information management practices. The CFPB acknowledges in its proposed rule that community banks already comply with these rules. ICBA said that clear guidance will ensure that community bank examiners do not require more prescriptive processes or procedures to comply with these rules.

Op-Ed: Community Banks Need Legal Safe Harbor from New Mortgage Regulations
To ensure that mortgage credit is not excessively restricted in Main Street communities, the Consumer Financial Protection Bureau should protect community bank portfolio lenders under new “qualified mortgage” standards, ICBA Senior Executive Vice President of Government Relations and Public Policy Karen Thomas wrote in an American Banker op-ed. Thomas warns of many community banks potentially leaving the mortgage business altogether if the CFPB's new qualified mortgage standards were to be implemented.
"While the concept of defining what's considered to be a good loan, or 'qualified mortgage,' would seem easy, it really is not. Underwriting mortgage loans is more art than science. And the more rigid the rules, the harder it will be for average consumers to get a home loan," Thomas wrote. "The impact will be particularly significant for community banks, which did not engage in the risky behavior that led to the mortgage crisis."

ICBA Advocates Community Bank Mortgage Exemption
ICBA urged the Consumer Financial Protection Bureau to exempt the section of the Dodd-Frank Act that prohibits consumers from paying upfront points and fees in connection with a mortgage loan transaction. In a comment letter, ICBA advocated that consumers should be able to pay points and fees to reduce their interest rate or participate in certain types of loan programs.

The CFPB proposed that mortgage loan originators could participate in “non-qualified” bonus or profit-sharing plans. ICBA said that while it appreciates the bureau’s action to permit mortgage loan originators  to participate in non-qualified plans, the proposed solutions would not work for most community banks and thrifts that derived a large portion of their revenue from mortgage lending activities.

ICBA also said that the proposed solution would be difficult to manage and would pose compliance challenges. The association recommended that the bureau  cap a  mortgage loan originator’s bonus payment from a “non-qualified” bonus plan to no more that 25 percent of the mortgage loan originator’s total yearly cash compensation.  ICBA stressed this would enable community banks to hire and retain high-quality staff while addressing the bureau’s concern over steering consumers into improper loans that could increase a mortgage loan originator’s compensation.

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