Public Affairs Update | By Stephen W. Rice
IBANYS was in Washington, D.C. in April and May, representing the interests of New York community banks in meetings with Congress and regulators during the Independent Community Bankers of America’s Annual Washington Policy Summit. New York’s delegation – and the entire summit – was led by John Buhrmaster, president of 1st National Bank of Scotia. Just the second New Yorker in history to chair ICBA, he is also an IBANYS officer, director and government relations committee member.
Buhrmaster was joined by fellow IBANYS national director Robert Fisher (chairman, president and CEO of Tioga State Bank, IBANYS’ past chairman and current director and government relations member), IBANYS President and CEO John Witkowski, and a number of other community bankers from the Empire State.
IBANYS’ representatives fanned out across Capitol Hill for two days of meetings with members of the New York congressional delegation, including Sen. Charles Schumer and Sen. Kristen Gillibrand’s office. Our agenda included several federal priorities, including comprehensive regulatory and tax relief for community banks to promote economic growth. We supported ICBA’s Plan for Prosperity/“Clear” Relief Act. Its provisions in H.R. 1750 in the House (and also included in H.R. 4304, the JOBS Act), and in S.1349 in the Senate.
Among the changes we urged were qualified mortgage (QM) reform, relief from escrow requirements, SOX 404(b) relief, and increasing the threshold for the Fed’s Small Bank Holding Company Policy Statement to facilitate small bank capital access. The House legislation would also increase the small servicer exemption threshold from 5,000 to 20,000 loans, eliminate annual privacy mailings when the bank’s policies haven’t changed, and provide exemptions from independent appraisal requirement and cost-benefit justification of new rules. Our meetings “on the hill” were well received, and potentially added more New York sponsors to the legislation.
We also discussed GSE reform, to replace Fannie Mae and Freddie Mac and reform the secondary mortgage market. Community banks represent 20 percent of the mortgage market, and need to retain access to the secondary market without the complexity and costs associated with securitizing loans. We stressed reforms must not result in consolidation of the housing finance system into a few mega banks and Wall Street firms. The Senate has been considering two major proposals (Johnso-Crapo and Corker-Warner). Both have positive features, but neither provides proven solutions for community banks and our customers. Senator Schumer thoroughly discussed the ramifications on community banks, and appeared receptive to our concerns and priorities.
We also discussed several other issues on the hill, including eliminating the unfair credit union and farm credit system tax subsidy and the FASB proposal involving credit loss accounting standards.
Yellen: ‘Fresh Look’ at
Community Bank Regulation
Federal Reserve Chair Janet Yellen addressed the ICBA Policy Summit on Thursday, her first appearance before a financial industry group since Senate confirmation earlier this year. She said the Fed is working with the Financial Accounting Standards Board (FASB) to allow community banks to build upon current credit-risk management techniques, rather than being required to use complex modeling processes for credit losses on loans and securities. She also stated that the Fed will tailor its supervision of community banks to reduce their regulatory burden.
“We are taking a fresh look at how we supervise community banks and possible ways that supervision can be smarter, more nimble and more effective. A one-size-fits-all approach to supervision is often not appropriate,” she said, adding that the Fed is “taking a disciplined approach” to regulation, weighing the costs and benefits of regulatory implementation and “asking whether it makes sense for a specific policy to apply to community banks.”
ICBA President and CEO Cam Fine said Yellen “hit a grand-slam homerun” with her remarks, noting what she said “resonated really big time … She clearly understands the community banking model. She has a lot of practical knowledge about the smaller banks.”
Later in the day, community bankers met with the senior leadership of the FDIC, OCC, CFPB and OCC.
IBANYS thanks all our New York participants for their time and effort in helping to make the 2014 Policy Summit a major success, and we join in congratulating John Buhrmaster for his leadership, and the ICBA team for producing a record attendance and significant show of force for the community banking industry in the nation’s capitol.■
Steve Rice coordinates government relations and communications for the Independent Bankers Association of New York State. He has worked in the New York banking industry and New York state government for more than three decades.