Wednesday, December 2, 2020

Senate passes regulatory relief package

On a vote of 67-31, the U.S. Senate passed its version of regulatory reform for traditional community banks.

“This has been a tough fight,” OBA President and CEO Roger Beverage said. “We’ve been working on trying to shape a compromise for more than four years. Yesterday was a huge win for the banking industry, but especially for smaller community banks.

“I think what’s so impressive, at least to me, is that 17 Democrats withstood assaults from some of their colleagues. Sen. Elizabeth Warren led the charge, calling out her Democrat friends, but the 17 Ds stood tall and kept their word, unlike Sen. Warren.”

Beverage noted there are a number of provisions in the bill that will help virtually every bank in Oklahoma.

Here are a few of the bill’s highlights:

• Mortgages originated and retained by the lender (bank or credit union) <$10 billion will be designated as “Qualified Mortgages.”
• Appraisal requirements in rural areas, mostly for smaller banks, are lessened because of the scarcity of qualified appraisers.
• Community banks that make 500 mortgage loans or less per year and have a strong history of taking care of their communities are exempt from additional HMDA requirements, but not the current requirements.
• For banks under $10 billion and have originated 1,000 or fewer TILA mortgage loans (loans secured by a first lien on a principal dwelling) during the last year, there is an exception to the TILA escrow requirements.
• Capital calculations for banks <$10 billion are greatly simplified.
• Reciprocal deposits are no longer considered “brokered deposits.”
• Banks <$10 billion are exempt from the Volcker Rule.
• Eligibility level for short-form call reports is increased from $1 billion to $5 billion.
• Raises eligibility for use of the Fed’s Small Bank Holding Company Policy Statement from $1 billion to banks with $3 billion in assets.
• Raises eligibility for the 18-month exam cycle from banks up to $1 billion in assets to banks with $3 billion in assets.

“This bill will help MILLIONS of Americans gain access to credit they do not now have,” Beverage said.” I thought Sen. Warren ‘got it’ and understood the importance of this measure for community banks, but I was mistaken. She attacked this bill with all the fury and outrage she could muster. At one point she said that ‘all bankers are breaking the law.’

“She also went after her Democrat colleagues and chastised them for supporting this bill. She led the arguments against the bill and predicted that its passage would lead to another ‘big bank bailout’ by the taxpayers. What she ignored is that in 2012 – during her first campaign for the Senate – President Obama pointed out that banks that were ‘bailed out’ have repaid those funds, with interest.”

Speaking before a crowd of about 6,000 voters in Manchester, New Hampshire, on Oct. 18, 2012, Obama was explaining the “bailouts” for auto companies and banks. He also noted, of all the fiscal issues facing the nation, the bank bailouts are no longer among them.

We got back every dime used to rescue the banks,” Obama told his supporters on that day. “We made that happen.”

“Yesterday I felt great, but when I woke up this morning I realized that we are still a long way from reaching home plate,” Beverage said. “There are a lot of things that are being discussed in the House. I have encouraged our delegation to ignore the idea of amending the bill and just get it passed. But Chairman (Jeb) Hensarling (R-Texas) seems to have other ideas.

“Stay tuned for more information about this HUGE win in the Senate and the process of how it works its way back through the House procedures. I’m optimistic, but I’m not counting my chickens yet.”