ABA Urges Enactment of Exam Relief Bill
AmBA strongly supports and urges the enactment of a bipartisan bill (H.R. 3461) that would provide critical balance and transparency to the bank examination process, association Chairman Kell Kelly told the House Financial Institutions Subcommittee yesterday.

The Financial Institutions Examination Fairness and Reform Act (H.R. 3461) -- introduced by subcommittee Chairman Shelley Moore Capito (R-W.Va.) and ranking member Carolyn Maloney (D-N.Y.) and co-sponsored by the Arkansas Congressional delegation (Crawford, Griffin, Ross, and Womack)  -- “takes a major step toward a more balanced and transparent approach regarding how, and on what basis, decisions are made by the regulatory agencies in the examination process,” said Kell Kelly, President and CEO of SpiritBank of Bristow, Oklahoma.

“It also addresses some examiner decisions that have effectively and unnecessarily reduced the amount of capital available for increased lending -- particularly to small businesses,” he said. Kelly explained that H.R. 3461 is based on ensuring that the fundamental principles of accountability, transparency and quality are applied to regulators’ decision-making during the examination process.

“The bill would confirm clear exam standards based on long-established interagency policy and create an independent [Federal Financial Institutions Examination Council] ombudsman to ensure the consistency and quality of all examinations,” he said. “It provides mechanisms that guard against overly conservative examinations and provides a meaningful path for appeal by banks when there are legitimate concerns that the examination decisions have gone too far.”

Kelly emphasized that the way the banking system is regulated directly affects the country’s economic growth and vitality. “Overly conservative examinations translate into less credit in local communities, which means businesses grow more slowly and create fewer jobs,” he said. “There is no question that the regulatory pendulum has swung too far in reaction to the financial crisis.” Read more. Read Kelly’s testimony. Read other witnesses’ testimony.

We will continue to monitor and work with our Arkansas Congressional Offices and our American Bankers Washington, DC staff on this legislation.

Crawford, Griffin, Ross, and Womack Co-Sponsor ABA backed bill!

Every member of the Arkansas Congressional delegation has signed on as a Co-Sponsor to HR 3461, the Financial Institutions Examination Fairness and Reform Act. Please contact your US Congressman and thank him for co-sponsoring this banking bill.

The ABA-supported bill, introduced by Rep. Shelley Moore Capito (R-WV) and Rep. Carolyn Maloney (D-NY), would ensure that banks receive timely examination reports, including full documentation of the information regulators used to make their determinations, and it would provide new standards for examinations.

The new standards would include restricting the placement of commercial loans in nonaccrual status solely because collateral has deteriorated in value, and not requiring new appraisals on commercial loans unless new funds are involved. H.R. 3461 also would establish a new, independent inter-agency ombudsman within the Federal Financial Institutions Examination Council to ensure the consistency and quality of all exams, and it would create a timely, independent and fair process for banks to appeal examination decisions without fear of reprisal.

Although the House Financial Services Committee has not released their hearing schedule, we expect the Financial Institutions Subcommittee to hold a hearing on the legislation in February. It is our hope that following the hearing this legislation will be marked up. We will continue to work with our Arkansas Congressional Offices and our American Bankers Washington, DC staff on this legislation. We will know more when Congress returns next week.