Banking News

Moran, Tester Introduce AmBA-Supported Reg Relief Package March 26, 2015

Sens. Jerry Moran (R-Kan.), Jon Tester (D-Mont.) and four other bipartisan cosponsors have introduced the AmBA-supported Community Lending Enhancement and Regulatory Relief Act (S. 812), a package of financial regulatory relief measures that is part of AmBA’s Agenda for America’s Hometown Banks.

Incorporating provisions that have also been introduced in the House, the bill would allow banks with less than $10 billion in assets to receive Qualified Mortgage designation for loans held in portfolio, exempt banks with less than $10 billion in assets from the Consumer Financial Protection Bureau’s escrow rule and exempt banks with less than $1 billion in assets from Sarbanes-Oxley internal control certification requirements.

FDIC Issues Reminder on AOCI Calculation Election March 26, 2015

The FDIC is reminding bankers not subject to advanced approaches under Basel III that they may elect to exclude Accumulated Other Comprehensive Income from their Basel III regulatory capital calculations. The agency emphasized that this is a one-time election that must be made on Schedule RC-R of the March 31, 2015, Call Report.

Banks making this election must add to common equity tier 1 capital any net unrealized losses and subtract any net unrealized gains on available-for-sale debt securities, and they must include in common equity tier 1 capital any net unrealized losses on available-for-sale equity securities, the FDIC said.

AmBA-led banker advocacy contributed to the regulators’ decision to move away from their original proposal that all banks run unrecognized gains and losses through capital. Click here to read the guidance.

Rep. McCarthy: Growth Thrives on ‘Measured Risk-Taking’ March 26, 2015

Underscoring the role that “measured risk” plays in driving growth, House Majority Leader Kevin McCarthy (R-Calif.) opened his remarks at AmBA Government Relations Summit with a personal story about his career as a small business owner in Bakersfield, Calif., during his college years.

“The greatest growth happens in small businesses, but you can’t start anything without capital,” he said, noting the role of hometown banks in providing startup and growth capital to firms. “If you eliminate risk, you have no growth.”

The burden of “one-size-fits-all” regulation from the Dodd-Frank Act has tilted the industry’s posture toward “risk elimination” rather than prudent risk management, McCarthy explained. He urged bankers across the industry to come together on Dodd-Frank reform efforts.

“You should push us and hold us accountable,” he said, citing the trickle of new bank charters since the bill was passed into law in 2010 as a reason Congress “should run to reform it. We want to measure how regulation is working by the number of people who want to enter the banking business.”

McCarthy also stressed the importance of bankers’ continued engagement with elected officials in their cities or towns. “You should invite every member into your bank. Let them have a clear understanding from their hometown.”

Alabama Banker Testifies on ‘Avalanche’ of Regulation Harms to Bank Customers March 19, 2015

Sharing stories of reg burden from across the country, AmBA Community Bankers Council Member Tyrone Fenderson testified before the House Financial Services Committee on Wednesday, stating that the growth of bank regulation is hindering hometown banks in their efforts to serve customers.

In his testimony, which included input from the Arkansas Bankers Association and other state banking associations, Fenderson spoke on the direct impact that banks have on a community's economy - fueling job creation, economic growth, and prosperity. He also shared real-life stories of how regulatory burden hurts customers.

“These stories are common at hometown banks across the country,” he said. “Community banks have always prided themselves on being flexible to meet the unique circumstances of their customers.”

Fenderson is the president and CEO of Commonwealth National Bank in Mobile, Alabama. Click here to read his testimony.

Rep. Barr Introduces ABA-Backed Reg Relief Bill March 18, 2015

Rep. Andy Barr (R-Ky.) yesterday introduced the ABA-advocated American Jobs and Community Revitalization Act (H.R. 1389), a package of financial regulatory relief provisions that are core components of ABA's Agenda for America's Hometown Banks.

Barr’s bill would institute an extended 18-month exam cycle for highly rated community banks; streamline the process and reduce the number of currency transaction reports; and allow dividends to be paid for tax purposes, thus eliminating disadvantages in Basel III for the 2,000 community banks organized as S corporations.

H.R. 1389 also includes ABA-backed provisions that would allow loans held in portfolio to be designated as Qualified Mortgages and a process to apply for designation by the Consumer Financial Protection Bureau as being in a rural or underserved area -- both of which Barr has introduced as separate bills.

ABA President and CEO Frank Keating welcomed the legislation, noting that it “would help reduce regulatory burden on community banks and make it easier for them to meet their customers’ needs. We stand ready to work with members of the House as they move forward with this important effort.”

H.R. 1389 was introduced on the same day that a delegation from the Kentucky Bankers Association met with Barr, pictured above (left) with KBA President and CEO Ballard Cassady (right). Read more.

ABA Salutes Luetkemeyer’s CLEARR Act March 18, 2015

ABA wrote yesterday to Rep. Blaine Luetkemeyer (R-Mo.) to thank him for introducing the Community Lending Enhancement and Regulatory Relief Act (H.R. 1233). The bill, a part of ABA’s Agenda for America’s Hometown Banks, “contains many helpful provisions that ABA has long advocated for in order to ease regulatory burdens,” the association said.

The CLEARR Act includes measures that would streamline banks’ privacy notice requirements, space out the exam cycle, reduce the burden of filing Call Reports, increase the small servicer exemption in the Consumer Financial Protection Bureau’s mortgage rules and expand the number of loans that can be designated as Qualified Mortgages, among others. Read the letter. Read the letter.

Supreme Court OK’s DOL Position that MLOs Aren’t Exempt under FLSA March 17, 2015

On March 9, the U.S. Supreme Court issued its decision in the case brought by the Mortgage Bankers Association challenging the Department of Labor’s 2010 interpretation that mortgage loan officers were not eligible for the administrative exemption under the Fair Labor Standards Act and thus must be paid overtime.

Perez v. Mortgage Bankers Association. The Court held that DOL did not have to go through the notice and comment process when it issued its 2010 interpretation. The 2010 interpretation reversed a 2006 opinion letter that mortgage loans officers did qualify for the administrative exemption. The only question before the Supreme Court was whether DOL had to issue a formal proposal and seek public comment before it could change its position. The MBA had prevailed in the Court of Appeals for the D.C. Circuit, and DOL appealed that decision to the Supreme Court.

Under the Administrative Procedures Act, which governs federal agency rulemaking, “legislative rules” – which have the force and effect of law – must be adopted through the notice and comment process that permits interested parties to provide input on the proposed rules. “Interpretive rules,” by contrast are not supposed to have the force of law and thus do not require input from the public. The D.C. Circuit, recognizing that interpretive rules often do have the effect of law, established a doctrine in Paralyzed Veterans of Am. v. D.C. Arena that requires agencies to go through the notice and comment process when significantly changing interpretive rules. However, in its decision, the Supreme Court invalidated the D.C. Circuit’s doctrine and held that changes in interpretive rules do not need to go through the notice and comment process.

Other exemptions may be available. As a result of the Supreme Court’s decision, DOL has secured the interpretation that mortgage loan officers do not qualify for the FLSA administrative exemption. However, there may be other FLSA exemptions, such as the outside sales exemption, that apply. Click here for a discussion of the possible exemptions available for mortgage loan officers.

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