Proposed Call-Report Reforms Are Insufficient

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ICBA and thousands of community bankers told federal banking agencies that their proposal to streamline community bank quarterly reporting requirements does not go far enough to provide meaningful regulatory relief. Although the agencies proposed a revised call report for community banks with less than $1 billion in assets, the data items to be removed generally do not apply to community banks.

Joining more than 3,000 community bankers who submitted comments to the Federal Financial Institutions Examination Council, ICBA called on regulators to implement a short-form call report that community banks would file in the first and third quarters of each year. In a comment letter, ICBA noted that truly streamlined reports would roll back the paperwork mandates on community banks, while local institutions would continue to submit complete call reports in the second and fourth quarters of each year.

ICBA and community bankers have long advocated relief from the call report, which has more than 80 pages of forms and 670 pages of instructions. Nearly 15,000 community bankers advocated substantial relief in a 2014 petition, and 98 percent of respondents in a 2014 survey said a short-form call report would reduce their regulatory burden.

Withdraw Plan to Share Customer Information
ICBA strongly urged the Consumer Financial Protection Bureau to withdraw proposed amendments that, if enacted, would expand the bureau’s discretion to share confidential supervisory information with government agencies with no supervisory authority. In a letter filed with four other financial trade associations, ICBA said the proposal violates the plain language of the Dodd-Frank Act governing the CFPB’s sharing of such sensitive information and needlessly exposes such information to a potential data breach and public dissemination.

Push Against Estate-Tax Increase
ICBA continued its call for the IRS to withdraw its proposal to raise taxes on community banks and other family-owned businesses. As members of the Small Business Legislative Council, ICBA and more than 40 other business trade group members noted the IRS plan is estimated to increase the estate tax on community banks and other family businesses by more than 30 percent.

House Ways and Means Committee members last month sent a letter to Treasury Secretary Jacob Lew urging the department to withdraw the proposed regulations.

The IRS proposal to amend Section 2704 of the tax code would effectively end estate-planning techniques commonly used to transfer community banks and other family-owned businesses to the next generation. Under the plan, transferring community banks and other businesses to family members would in many cases become unaffordable.

In a comment letter, ICBA told the IRS that significant changes to the estate tax should be left to Congress. ICBA also is pressing for the passage of House and Senate legislation to block the proposed rule and is calling on community bankers to tell their lawmakers to support the bills.

TRID Rule Clarifications
ICBA expressed support for several proposed changes to the TILA-RESPA Integrated Disclosure rule but urged additional improvements. The ICBA-advocated changes, which include clarifications on disclosure forms and cooperative units, would resolve several prominent ambiguities with the requirements.

ICBA also urged the Consumer Financial Protection Bureau to implement a retroactive effective date for some of the changes, adjust Loan Estimate timing requirements for multiple-advance construction loans, and continue taking a diagnostic and corrective approach regarding good-faith efforts to comply with the mortgage disclosure requirements.

Improper FCA Lending
ICBA called on the Farm Credit Administration to review illegitimate activities undertaken by Farm Credit System entities. In a letter to the FCA, ICBA cited several examples of questionable FCS loans and advertising and asked the agency to answer questions about the misconduct.

GSE Credit Risk Transfers
Fannie Mae and Freddie Mac credit risk transfers increase counterparty risk at the government-sponsored enterprises and leave community banks at a competitive disadvantage, ICBA told the Federal Housing Finance Agency. Since 2013, the housing GSEs have engaged in various transactions to transfer substantial amounts of credit risk to investors in the private market. ICBA said that credit risk transfers are not a substitute for capital and urged FHFA to require the GSEs to develop and implement a capital-restoration plan.

Support for Senate Municipal Bond Bill
ICBA expressed support for Senate legislation that would allow certain municipal bonds to be considered high-quality liquid assets for the purposes of the liquidity coverage ratio. S. 3404, introduced by Sens. Mike Rounds (R-S.D.) and Mark Warner (D-Va.), would promote a strong municipal bond market and encourage financial institution investment in local communities. Similar legislation passed the House on a voice vote earlier this year.

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