Aaron Stetter: Setting the advocacy agenda

ICBA’s 2021 legislative agenda aims to assist banks through the pandemic and beyond.

By Aaron Stetter, ICBA

With the 117th Congress in session, ICBA has released its 2021 legislative agenda. It’s designed to ensure community banks have the tools they need to remain the economic engines of Main Street throughout the COVID-19 pandemic and beyond.

With a track record of working with both political parties, ICBA believes these recommendations offer bipartisan solutions to aid the country’s recovery from a costly pandemic.

ICBA is seeking a combination of pandemic relief legislation to address short-term economic weaknesses in our economy and post-pandemic provisions to promote economic growth, job creation and a competitive landscape where all market participants—new and existing—are subject to appropriate oversight.

With a track record of working with both political parties, ICBA believes these recommendations offer bipartisan solutions to aid the country’s recovery from a costly pandemic and set the trajectory for fundamental aspects of American economic life for a generation.

ICBA’s immediate priority is working with Congress to create a financial bridge to a time when enough Americans are vaccinated against the coronavirus for normal commerce to resume. To that end, we will continue to advocate for legislation that includes renewing, refining and strengthening Coronavirus Aid, Relief, and Economic Security (CARES) Act programs like the Paycheck Protection Program, capital and accounting relief, and appropriate tax relief as long as they are necessary.

Post-pandemic recovery

Looking ahead to when the pandemic recedes and recovery begins, ICBA is advocating for reforms that would empower community banks to better serve those who depend on them while leveling the regulatory playing field. These include:

  • Encouraging de novo community banks. ICBA supports a flexible and tailored supervisory policy with regard to de novo applicants. Capital standards, exam schedules and other supervisory requirements should be based on the pro forma risk profile and business plan of the applicant and not on a standard policy that applies to all de novo bank applicants.
  • Supporting minority depository institutions (MDIs). Minority banks are committed to the social mission of improving lives and stabilizing neighborhoods despite the challenges of operating in distressed communities. It is crucial that minority banks have the legislative, regulatory and financial support they need to stay operational and profitable.
  • Safeguarding banking services for legal cannabis-related businesses. As more states legalize cannabis, public safety requires that cannabis-related businesses, as well as the businesses that serve them, have access to the traditional banking system. ICBA supports legislation to create a safe harbor from federal sanctions for financial institutions that serve cannabis-related businesses in states where cannabis is legal.
  • Modernizing the Bank Secrecy Act (BSA). ICBA recommends raising the currency transaction report (CTR) threshold from $10,000 to $30,000 and indexing future increases on an annual basis. The current threshold, set in 1970, is significantly outdated and captures far more transactions than originally intended. A higher threshold would produce more targeted, useful information for law enforcement. ICBA also supports the creation of a tax credit to offset the cost of BSA compliance.
  • Blocking regulatory subsidies for fintech. Congress should ensure that online marketplace lenders and other fintechs are subject to the same standards of safety, soundness and fairness as other federally chartered institutions. In particular, the Office of the Comptroller of the Currency (OCC) should not issue a special-purpose charter for fintechs without explicit statutory authority from Congress.
  • Closing the ILC loophole. ICBA supports statutory closure of the industrial loan company (ILC) loophole in the Bank Holding Company Act that allows commercial companies and fintechs to own bank-like ILCs without being subject to federal consolidated supervision.
  • Curbing or eliminating tax subsidies for rapid-growth, bank-like credit unions. ICBA urges Congress to re-examine the outmoded credit union tax subsidy.
  • Keeping the Farm Credit System in check. Congress should stop Farm Credit System (FCS) lenders from exploiting their tax and funding advantages as government-sponsored enterprises (GSEs) to siphon the best loans away from community banks in rural areas. The FCS should stick to its congressionally chartered mission to serve bona fide farmers and ranchers and a narrow group of farm-related businesses.
  • Incentivizing credit for low- and middle-income customers and American agriculture. ICBA supports the creation of new tax credits or deductions for community bank lending to low- and moderate-income individuals, businesses, farmers and ranchers. This would help to sustain and strengthen lending to these borrowers and help offset the competitive advantage enjoyed by tax-exempt credit unions and FCS lenders.
  • Ensuring housing finance reform supports the mortgage market and taxpayers. Reform efforts must provide robust and equitable secondary market access for lenders of all sizes, ensure no competition from the GSEs at the retail level and permit retention of mortgage servicing rights on transferred loans. ICBA does not support reform proposals that would liquidate and distribute the GSEs’ assets, intellectual property or infrastructure to the largest national lenders and Wall Street institutions.
  • Opposing postal banking. ICBA opposes well-intended but ultimately counterproductive proposals to allow the U.S. Postal Service to offer financial products and services.

These policy recommendations will play a critical role in creating a robust post-pandemic recovery that charts a course for inclusive growth and a more competitive economy that serves small businesses and consumers. We look forward to working with Congress to make these a reality.

Aaron Stetter (aaron.stetter@icba.org) is ICBA’s executive vice president, policy and political operations