Advocacy

ICBA Advocacy in Action

The following hot-button issues are top priorities as ICBA advocates common-sense reforms on behalf of community banks and the communities they serve.

First Quarter 2023

The New Congress

The 118th Congress is split between a Republican controlled House and a Democratic-controlled Senate. In a divided Congress, only bipartisan legislation will be enacted.

ICBA expects Congress to focus on regulation of fintech and crypto assets, the SAFE Banking Act, climate risk, tax cut extensions, and agency oversight, as well as non-financial issues such as crime and border security. ICBA will continue to promote bipartisan policy favorable to community banks.

Climate Risk Regulation

ICBA is opposing proposals under consideration in the Administration, the agencies, and Congress to create new mandates regarding climate risk. Proposals include stress testing for the impact of weather events on bank-held assets, concentration limits, increased disclosures, and other mandates.

Deposit Insurance Assessments

The FDIC has finalized a 2-basis point increase in the deposit insurance assessment rate, effective in the first quarter assessment of 2023. ICBA is pressing the FDIC to reduce assessment rates for community banks when the DIF reaches 1.35 percent, which is likely to occur as soon as the first quarter of 2023.

  • ICBA submitted a comment letter to the FDIC on August 19 objecting to the disproportionate impact the rate hike would have on community bank lending.
  • ICBA led a grassroots campaign that generated over 150 letters.

Crypto Assets, Decentralized Finance, and CBDC

Unregulated crypto assets, including stablecoins, as well as decentralized finance (DeFi), threaten to disintermediate community banks and heighten risks for the wider economy and must be brought within the regulatory perimeter.

ICBA strongly opposes efforts to grant nonbank stablecoin issuers access to the Federal Reserve master account and the creation of a U.S. CBDC, which would directly compete with community bank deposits needed to fund local lending. ICBA will continue to work with regulators, policymakers, and standards-setting bodies to address serious risks to financial stability, consumer protection, and community bank lending.

  • ICBA has convened a Digital Assets Task Force to examine and deliberate issues related to a proposed CBDC and digital assets.

Durbin Amendment Expansion Legislation

ICBA opposed legislation to create new credit card routing mandates, expanding on the Durbin Amendment’s interchange restrictions. While the Credit Card Competition Act of 2022 is designed to apply to banks with over $100 billion in assets, community banks would be forced to subsidize costly system wide changes that would put customer data at risk.

  • ICBA defeated efforts to pass this legislation in the 117th Congress by preventing its inclusion in the must-pass National Defense Authorization Act and omnibus appropriations legislation.
  • ICBA released new polling which shows that a substantial bipartisan majority of voters oppose the Durbin proposal, which could end credit card reward programs.

FHLB Advances

ICBA is urging the Federal Housing Finance Agency (FHFA) to modernize its regulatory capital standards and conform them with those of the federal banking regulators.

Currently, FHFA requires banks to recognize unrealized “paper losses” on debt securities held for sale. Banks with negative tangible equity due to such “losses” are ineligible for new or increased existing FHLB advances, an important source of liquidity and lending.

  • ICBA coordinated advocacy included congressional letters to the FHFA signed by bipartisan groups of lawmakers, joint trades letter to FHFA, meetings with FHFA and all banking agencies.

Small Business Loan Data Collection Rule

The CFPB’s proposed rule would require banks to collect and report data on loan applications from small businesses, as required by the Dodd-Frank Act. The proposed rule, which would apply to banks that originate 25 or more small business loans per year, fails to recognize the customized nature of small business lending. The rule will be finalized before the end of March.

  • ICBA submitted extensive comments to the CFPB urging the Bureau to exempt community banks below $1.3 billion in assets, collect only statutorily-mandated data, and keep small business borrower information private. ICBA mobilized bankers and business owners nationwide, collecting and submitting detailed comment letters from nearly 300 community banks and small businesses.
  • Rebeca Romero Rainey contributed an op-ed to American Banker expressing opposition to the CFPB proposal.

Industrial Loan Company Loophole

The industrial loan company (ILC) loophole allows commercial companies to own ILCs and evade holding company supervision. ICBA is promoting bipartisan legislation that would close the ILC loophole, grandfather existing ILCs, and address pending applications.

  • In a victory for ICBA, the “Close the ILC Loophole Act” (H.R. 5912) passed the House Financial Services Committee in June 2022, the first ILC-reform legislation to pass committee since 2007.
  • Similar legislation, the Close the Shadow Banking Loophole Act (S. 5189) was introduced in the Senate in December and is expected to be reintroduced this Congress.

Overdraft

Congress and the regulators should carefully consider the unintended consequences of any new overdraft restrictions targeting so-called “junk fees,” a gross mischaracterization of the White House and CFPB. Overdraft legislation or regulations should not punish community bank customers by restricting access to services of convenience that meet their account needs.

  • ICBA has surveyed member banks to collect data to counter negative media and demonstrate to policymakers the value of overdraft protection and has conducted a lobbying and grassroots campaign against adverse legislation.

ICBA Anti-Credit Union “Wake Up” Campaign

The mission of this campaign is to pursue legislative and regulatory changes to address the expansion of credit unions and to draw media and public attention to the industry’s aggressive and abusive exploitation of their tax exemption.

  • ICBA will continue to educate lawmakers of the harm to individual consumers when tax-exempt credit unions acquire tax-paying community banks eroding the tax base.

SBA Direct Lending

ICBA is opposing legislative and agency proposals for SBA direct 7(a) lending. Such proposals would sideline community bank lenders, reduce access to small business credit, and be prone to fraud. ICBA also strongly opposes an SBA proposal to allow fintechs to originate 7(a) loans thereby increasing fraud risk.

  • ICBA witnesses have testified (links here and here) in opposition to the proposal before the House Small Business Committee hearing.
  • ICBA supports legislation expected to be reintroduced in the House and Senate that would prohibit SBA direct lending.

Tax Incentives for Community Bank Agriculture and Home Loans

ICBA supports the ECORA Act (H.R. 1977/S. 2202) which would create a tax exclusion for interest on loans secured by agricultural land and residential mortgages in rural communities. ICBA has launched a grassroots campaign to promote cosponsorship of ECORA.

Cannabis Banking

ICBA supports legislation that would create a safe harbor from federal sanctions for financial institutions that serve cannabisrelated businesses in states where cannabis is legal.

  • ICBA sponsored a Morning Consult poll showing that two-thirds of voters support giving state-legal cannabis businesses access to the banking system.

CRA Modernization

The federal banking agencies have jointly proposed a revised CRA rule that would create new data collection and reporting burdens for many community banks. ICBA is urging the agencies to make a set of recommendations that would ease community bank compliance. A final rule is expected in early 2023.

  • An ICBA witness testified before the House Financial Services Committee in July.
  • ICBA submitted a comment letter to the agencies in August.

Support for Agriculture

ICBA advocates for enhancing USDA guaranteed loans, maintaining strong crop insurance products, and ensuring commodity programs provide a stable safety net for American agriculture.

  • ICBA will lobby for a robust Farm Bill in 2023.

REAL RESULTS FOR YOUR BANK

Stopped Advance of IRS Reporting

ICBA came out early and forcefully against IRS account reporting, launching media and grassroots campaigns and leading cross-industry letters to Congress. The proposal was omitted from the House-passed Build Back Better Act. ICBA continues to oppose its inclusion in a Senate bill.

REAL RESULTS FOR YOUR BANK

Harmful Tax Proposals Effectively Taken Off the Table

Early versions of the Build Back Better Act included provisions to tax capital gains at death and raise the corporate rate, among other adverse provisions. While these provisions are no longer under consideration, due in part to ICBA’s advocacy, other harmful tax increases remain in play. ICBA continues our campaign against them.

REAL RESULTS FOR YOUR BANK

Overdraft Bill Withdrawn From Markup

As a result of an ICBA lobbying and grassroots campaign, a bill to impose restrictions on bank overdraft practices was withdrawn from a scheduled markup in the House Financial Services Committee.