ICBA’s 2019 Capital Summit raised awareness of key issues for the industry.
By Aaron Stetter, ICBA
Every community banker has a story to tell, and lawmakers want to hear it.
That’s the takeaway from ICBA’s successful 2019 Capital Summit—and it should carry community bankers forward this summer as lawmakers return to their districts for August recess.
Over four spring days, community bankers grabbed the attention of Congress and policymakers with more than 320 advocacy meetings with House and Senate lawmakers and staff, speeches from banking’s most influential lawmakers, the introduction of a Senate bill to enhance community bank access to capital, and the opportunity to testify before Congress.
Bridging the partisan divide
In a demonstration of ICBA’s bipartisan association, Senate Banking Committee chairman Mike Crapo (R-Idaho) and House Financial Services Committee chairwoman Maxine Waters (D-Calif.) gave back-to-back speeches, mentioning several of the same priority issues despite their party differences.
It was a notable moment, leading the Economist to write that “The class of the guests reflects the clout of the hosts … two powerful visitors” and describing ICBA and its members as “both deeply rooted in their home soil and well organized.”
Crapo, a longtime community bank ally, said community bank grassroots advocacy was instrumental in passing the S.2155 regulatory relief law and remains critical to advancing additional reforms. He noted that community bank regulatory relief has contributed to the nation’s continued economic growth and that oversight of the law’s regulatory implementation—including capital relief—remains an important priority.
Crapo cited additional community banking issues Congress is working to address, including housing finance reform, reauthorizing the National Flood Insurance Program and extending data privacy and security protections to other sectors as fraud losses mount. “The place where the loss was caused is the place where the loss should be compensated,” he said.
Crapo—the lead sponsor on S.2155 and a key advocate of tax reform as a member of the Senate Finance Committee—encouraged community bankers to continue advocating to achieve their legislative goals. “Grassroots politics works,” he said.
Waters pledged to continue working with the industry on needed reforms. “I have an open-door policy,” she said. “This is your government and you deserve to be heard.”
She said Congress continues working to advance pro-community bank policies, citing her panel’s passage of ICBA-supported legislation to establish a federal safe harbor for banking legal cannabis-related businesses.
Waters told attendees that the House Financial Services Committee is working to level the regulatory playing field between community banks and other entities, develop consumer safeguards for fintech companies, scrutinize industrial loan company (ILC) oversight, modernize the Bank Secrecy Act and hold megabanks accountable.
Community bankers didn’t just listen, though. Through the organizational skills of ICBA’s affiliated state associations, community bankers met with their members of Congress to advance smarter banking policies that help level the playing field and promote financial prosperity for all. During more than 320 meetings with lawmakers and their staff, community bankers advocated regulatory relief through ICBA’s Community Focus 2020 platform as well as Bank Secrecy Act modernization, a federal safe harbor for banking legal cannabis-related businesses and other reforms.
Key to the success of these meetings was preparation—knowing both the issues and how to employ personal engagement and storytelling. Addressing community bankers before a second day of meetings with lawmakers on Capitol Hill, ICBA president and CEO Rebeca Romero Rainey lauded their efforts to ensure their voices are heard. “Nothing is more impactful than the specific stories and examples that you bring to the table,” she said.
Romero Rainey said that while the community banking industry’s achievements have had tangible results, such as the reemergence of de novo bank charters, there are many more opportunities to push the needle through grassroots advocacy.
Constituent meetings and communications with members of Congress are the most important factors influencing lawmakers’ policy positions, noted Bradford Fitch, president and CEO of the Congressional Management Foundation, a nonpartisan, nonprofit organization that aims to build relationships and improve how Congress functions. ICBA has partnered with the foundation to provide training opportunities and research for community bankers.
Fitch said elected officials want to hear from constituents about how public policies affect their districts and about the causes they champion.
“[Lobbyists] can’t tell your story. Only you can do that.”
—Bradford Fitch, Congressional Management Foundation
“Lobbyists can know the issue backward and forward—that’s what you pay them for,” he said. “But they can’t tell your story. Only you can do that.”
Direct from the regulator
Community bankers also heard from FDIC chairman Jelena McWilliams, who said the banking agencies are rethinking their regulatory approach to make it more agile and allow community banks to innovate. In fact, one of the biggest surprises of her first year leading the agency has been its willingness to evolve, she said.
McWilliams said regulations often stifle innovations that can bring more unbanked consumers into the banking fold. Among its efforts, the agency launched FDIC Tech Lab, which is working to reduce regulatory burdens on third-party due diligence to streamline tech partnerships, she said.
McWilliams also cited regulatory efforts to modernize the Community Reinvestment Act, increase transparency in Bank Secrecy Act reporting and mitigate the impact of the Current Expected Credit Loss accounting standards. She also shared that the FDIC is reviewing feedback on the 9% Community Bank Leverage Ratio, which ICBA and community bankers want lowered to 8%.
On the question of industrial loan companies, McWilliams said they are “the law of the land” and that community bankers should take up the issue with Congress, which ICBA is lobbying to permanently close the ILC loophole.
Talking capital in the Capitol
ICBA-supported legislation to enhance community bank access to capital was introduced in the Senate to help private and publicly traded banks raise much-needed capital during the summit. The Community Bank Access to Capital Act of 2019 (S.1233), introduced by Sen. Mike Rounds (R-S.D.), includes ICBA-advocated provisions to reduce reporting requirements and revise the SEC definitions of “accredited” and “nonaccredited” investors to attract new investors.
Meanwhile, ICBA community banker Todd McDonald, senior vice president and board director at Liberty Bank & Trust Co. in New Orleans, testified before the House Subcommittee on Consumer Protection and Financial Institutions on supporting community banks as alternative providers of small-dollar credit with a more favorable regulatory environment.
McDonald encouraged policymakers to allow community banks to develop responsible small-dollar alternatives tailored to the credit needs of their communities. He said banks can provide short-term, small-dollar installment loans that can help meet the needs of consumers while establishing a path to more mainstream financial products.
Preparing for the August recess
As members of Congress head home to their districts for August recess, community bankers are primed to build on the summit’s momentum and keep issues like BSA modernization, ICBA’s Community Focus 2020 policy platform, data security and pushing back against credit unions top of mind.
ICBA’s August Recess Lobby card provides talking points on key issues to help you make your case with your senators and representatives. But the most effective messages are the stories you can tell about how legislation affects both your community bank and its customers.
Whether you’re following up on a previous meeting or making contact for the first time, now is the time to schedule meetings with your legislators.
Visit icba.org/advocacy to see the August Recess Lobby card and to learn more about how you can advocate for your industry.
Aaron Stetter (email@example.com) is ICBA’s executive vice president, policy and political operations