From BSA to banking cannabis: ICBA’s advocacy agenda

Community banks and ICBA have a lot to celebrate, from legislative victories to a more level playing field. But that doesn’t mean our work is over. There are still plenty of regulatory and legislative opportunities that ICBA continues to fight for. Read on to learn about the agenda ICBA will advance in 2020 and how you can get involved.

By Kelly Pike, Illustrations by Tom Peake

Everyone needs an advocate, someone to step up to protect their interests while encouraging them to make the most of opportunities. For community banks, that advocate is ICBA.

As we head into 2020, ICBA is moving forward in the legislative and regulatory arenas, working to promote a strong banking system where common sense regulation and level playing fields are the rule of the day.

Independent Banker sat down with ICBA’s team of legislative and regulatory gladiators for a glimpse into community banking’s top advocacy priorities.



When innovation meets regulation

ICBA president and CEO Rebeca Romero Rainey sat down with Karen Thomas, senior executive vice president of government relations and public policy, and Paul Merski, group executive vice president of congressional relations and strategy, to talk about the role ICBA plays in navigating the intersection of fintech and regulation.

Paul Merski

Why does ICBA intercede when big players look to enter fintech?
Paul Merski: What we’re trying to prevent is giving fintech companies a competitive advantage where they are skirting existing regulations. The same rules and regulations should apply to everyone or be removed from everyone.

Rebeca Romero Rainey: The phrase that comes to mind is level playing field.

Rebeca Romero Rainey

What are ICBA’s concerns about Facebook’s Libra?
Merski: Libra wants to be part of the payment system, but they didn’t look at all the rules and regulations that apply to everyone else settling payments.

Karen Thomas: Libra is also bringing some attention to the ILC (industrial loan company) issue. People are beginning to understand what the implications might be for a banking system. Just like when Walmart tried to open an ILC, it was eye-opening as to why we separate banking and commerce.

Karen Thomas

Merski: ICBA has been very active and successful in having a number of ILC applications withdrawn from the FDIC. We’re hoping to see a bill to close the ILC loophole introduced in the Senate this fall.

Shifting gears, what are the challenges around the agencies’ offices of innovation, including FDIC’s Tech Lab?
Merski: We’re all trying to figure out how community bank and fintech partnerships work and are trying, ideally, to use this to further define how those partnerships could work.

Thomas: One of the challenges for community banks is vendor management. There are a lot of regulatory requirements around what banks need to do to manage vendor relationships, and there are some complex activities required by individual community banks to satisfy that requirement. Are there ways the agencies can be more helpful in streamlining that process?

How does ICBA feel about the proposed Office of the Comptroller of the Currency (OCC) pilot program for early feedback on innovation?
Thomas: We support the idea of pilots with some caveats. We want to be sure that if one company does a pilot, then it would acceptable for other institutions to do the same activities on the same basis.

Where does the ICBA ThinkTECH Accelerator fit in?
Romero Rainey: We are moving ourselves outside the realm of legislation and regulation to help ensure that fintech is available and viable for community banks. We want to be focused on ensuring fintech enables community banks to do their jobs and provide services better, rather than just disrupt them.

Housing reform

3 key housing reform issues

  1. The Qualified Mortgage Rule. ICBA opposes allowing the government-sponsored enterprise (GSE) patch, which exempts Fannie Mae and Freddie Mac from the CFPB’s Qualified Mortgage (QM) rule, to expire. Current proposed rule-making would allow the patch to expire in January 2021.ICBA would like to see the QM rule made more flexible and to include a safe harbor so that underwriters can use compensating factors to justify higher debt-to-income ratios than guidelines permit, says Ron Haynie, ICBA’s senior vice president of mortgage finance policy. “We’re going to be working to support reform of the QM rule so that it negates the reason for the patch,” he adds.
  2. Rebuild GSE capital. ICBA is pushing for GSEs to retain earnings to start rebuilding capital. Part of that is awaiting the U.S. Treasury report that will outline housing reform and articulate a new capital framework for the GSEs.“As far as we know, that’s where the administration and the Federal Housing Finance Agency wants to go with this,” Haynie says. “We’ve been one of the only large national banking [trade groups] that’s been pushing for the GSEs to be recapitalized. This can be done administratively and doesn’t rely on Congress.
  3. Five years of TRID. The CFPB is beginning its five-year assessment of TRID, or the Truth in Lending Act (TILA)-Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure. ICBA has already had conversations with CFPB staff and has passed on a list of pain points.

Cannabis banking

Establishing a safe harbor

Aaron Stetter

ICBA continues to support bipartisan legislation that would establish a safe harbor from federal sanctions for financial institutions that serve cannabis-related businesses in states where cannabis is legal, says Aaron Stetter, ICBA’s executive vice president of policy and political operations.

From testifying before the House Financial Services Committee this winter to submitting a statement to the Senate Banking Committee over the summer, ICBA has advocated for the Secure and Fair Enforcement (SAFE) Banking Act (H.R. 2215 and S.1152), which would enhance public safety and address regulatory compliance concerns by opening the traditional banking system to cannabis-related businesses. Part of ICBA’s Community Focus 2020 agenda, ICBA will push for advancement of this legislation throughout the fall.

Faster payments

Making a mark on the Fed’s real-time payments network

Carey Whaley

After years of persistence, ICBA celebrated a major milestone in August when the Federal Reserve announced it was moving forward with FedNow Service, a real-time payments and settlement system. Overcoming the objectives of the nation’s largest, riskiest banks, ICBA believes the Fed’s service will prevent a payments monopoly, provide equitable access to real-time payments and encourage innovation.

Now ICBA is working to shape what that service will look like, says Cary Whaley, first vice president of payments and technology policy. Among the key goals:

  • Get it done fast. “We want to encourage the Fed to move quickly to do this, eliminate a lot of comment periods and speedbumps, and try to bring this in,” Whaley says.
  • Limit access to regulated financial institutions. “We have to ensure that the only folks that have access to the settlement ranks are financial institutions. We don’t want to see the Amazons or Walmarts have direct access. Banking and commerce must remain separate,” he says.

In addition to ICBA’s ad campaign on real-time payments, which included ads in Politico and The Hill and sponsorship of Politico Morning Money, community bankers were strong advocates in this fight. Many made use of ICBA’s Be Heard grassroots action center ( to call and email policymakers in support of Fed involvement. It’s a tool that community bankers can continue to use as the Fed shapes the new system.

ICBA also worked to educate staff on Capitol Hill, with Whaley briefing House Financial Services Committee staff on why the Federal Reserve should have a leadership role in faster payments. ICBA will continue to promote the value of a FedNow Service to legislators as large banks push back against the Fed’s efforts.

Community Reinvestment Act

Changing the course of the CRA

Lilly Thomas

Lilly Thomas, ICBA’s senior vice president and senior regulatory counsel, shares insights on the agencies’ efforts to reform the Community Reinvestment Act (CRA).

Where are we with CRA reform?
Lilly Thomas: Regulators are working together to try and come out with a joint notice of proposed rule-making, and I anticipate that coming out, hopefully, by year-end. We’re meeting with regulators to remind them of our position. They are talking with us about what we’d like to see and the problems we’re seeing with the current system.

What kind of change is on the table?
Thomas: This really is an opportunity to change the course of the CRA. We’re talking about looking at a regulation that’s been in place since the 1970s with a fine-toothed comb to evaluate it holistically. It’s a chance to make changes that benefit community banks and the communities they serve. Usually, you have part of a regulation revamped, not the whole system.

What reforms is ICBA advocating for?
Thomas: ICBA wants consistency and transparency when it comes to the Community Reinvestment Act.

More specifically, we want to:

  • ensure CRA assessment areas are identified and delineated by community banks rather than regulators, as required by existing CRA regulations
  • update asset thresholds to reflect the current banking environment
  • see regulators acknowledge that a one-size-fits-all metric may not allow for important differences in bank profiles and markets
  • be provided with a list of activities that provide CRA credit.

What’s the next step?
Thomas: When the notice of proposed rule-making comes out, ICBA will summarize the proposal and ask our bankers for feedback. We’ll pass that on to regulators while encouraging community bankers to submit comment letters of their own.


Data and the CFPB

ICBA is working to engage staff at the Consumer Financial Protection Bureau (CFPB) to limit the burden of data collection and reporting requirements for community banks in two key areas undergoing review: the Home Mortgage Disclosure Act (HMDA) and section 1071 of the Dodd-Frank Act.

ICBA wants the CFPB to raise its coverage thresholds for collecting and reporting HMDA data for closed-end mortgage loans from 25 to at least 100, the maximum suggested in its proposed rule-making. ICBA also supports making permanent the 500 open-end lines of credit threshold instead of reverting to a 200 threshold in 2022, says Rhonda Thomas-Whitley, ICBA’s vice president and regulatory counsel.

ICBA has worked with community banks to identify problematic HMDA data fields and is pushing for relief from discretional data fields that were added by the CFPB but aren’t required by Dodd-Frank. Comments are open until Oct. 15. “We are encouraged that the new director appears to be open and flexible about relieving some of regulatory heartache,” Thomas-Whitley says.

As the CFPB considers rules for collecting and reporting data on financial institutions’ small business lending under the Equal Credit Opportunity Act—a Dodd-Frank mandate—ICBA is helping the CFPB understand how small business lending works at community banks to help the agency avoid adding new burdens when drafting rules.

“I think the bureau staff understands that they don’t want to make it so strenuous for community banks that they’d have to make serious alterations to the small business lending program,” says Michael Emancipator, vice president and regulatory counsel for ICBA.

ICBA is also pushing the agency to use its Cost-Benefit Analysis Office to go beyond the primary costs of initial setup and ongoing compliance to understand what it would do to the availability of small business credit in communities.

Community bankers can aid the cause by telling the bureau if they already collect similar data for other agencies, so the CFPB knows what data is already available and doesn’t duplicate it. The CFPB will also be soliciting the input of a panel of banks with $550 million or less in assets. “In the rule-making process, the earlier you can engage with regulators, the better,” Emancipator says.

Credit unions

Stopping growth-obsessed credit unions

Michael Emancipator

There’s something wrong when tax-exempt credit unions can afford to buy community banks. That’s why ICBA has formed a new interdisciplinary Credit Union Task Force with plans for a multi-pronged attack, Michael Emancipator says. Here’s what the task force is planning:

Slow the growth of aggressive credit unions. The public and Congress don’t know that even huge credit unions don’t pay taxes, are increasingly engaging in nontraditional activities and own unregulated affiliates. “Our job is to make stakeholders aware,” Emancipator says.

Level the playing field by enhancing community bank powers. Since the National Credit Union Administration (NCUA) is a cheerleader for credit unions, ICBA would like to see community bankers take a similar role, providing assistance like consulting hours to help identify new opportunities for growth like the NCUA does for credit unions. The NCUA has a streamlined process, including access to federal grants, for credit unions that want to become community development financial institutions, or CDFIs.

Pushing back against the NCUA. ICBA is drawing attention to proposed NCUA regulations like those on risk-based capital, the NCUA letter on non-member deposits and the appraisals rule to show that they are not appropriate. ICBA is also pushing for credit unions to be subject to the CRA. The good news is that NCUA’s overstepping has caught the attention of those who previously weren’t paying attention, including lawmakers and consumer advocates, Emancipator says.

Give community banks the resources they need to fight. ICBA has created materials to aid community bankers in educating state and local representatives and the press when banks in their area are acquired by credit unions. Community banks can also share stories of egregious credit union overreach by emailing

Bank Secrecy Act

BSA on the move

Chip Bartlett

ICBA continues to push for Bank Secrecy Act (BSA) reform with the goal of limiting the burden of the Customer Due Diligence Rule, raising currency transaction report (CTR) and suspicious activity report (SAR) thresholds, and soliciting feedback from law enforcement on which areas of information collection prove most helpful.

Two House bills and one Senate bill may see action this fall, says Chip Bartlett, ICBA vice president of congressional relations.

The Corporate Transparency Act of 2019 (H.R. 2513) would require corporations and limited liability companies to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) at the time the company is formed and require FinCEN to modify its Customer Due Diligence Rule to remove any redundancies.

The Coordinating Oversight, Upgrading and Innovating Technology, and Examiner Reform Act (H.R. 2514), would create a feedback loop between law enforcement and the banks and index CTR thresholds to inflation with adjustments made in five-year increments. ICBA will continue to advocate for increasing the CTR threshold to $30,000 and the SAR threshold to $10,000.

In the Senate, ICBA expects the introduction of the Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act by a bipartisan group of Senate Banking Committee members, Bartlett says. The bill would establish federal reporting requirements requiring all beneficial ownership information to be maintained in a federal database accessible by law enforcement. Shell companies would have to disclose their true owners to the U.S. Treasury. It would also create a bank-law enforcement feedback loop. Meanwhile, ICBA is working with the Treasury and FinCEN to find regulatory fixes. ICBA looks forward to working with both chambers and regulators to seek BSA relief.

Kelly Pike is a writer in Virginia.