• “Regulatory burden” is frequently cited as a primary reason for selling a community bank. Since 2010, we have lost approximately one-third of the banks nationwide, resulting in less support for business growth and financial services for individuals in many parts of the country. To lessen the impact of regulatory burden, IBAT supports:

The revision or repeal of section 1071 of the Dodd-Frank Act to prevent a deterioration of credit availability for small businesses. Community banks control a shrinking percentage of the overall banking assets in this country yet make nearly half of the small business loans under $1 million. These loans do not “fit in a box” and each is unique. In addition to the extra burden and expense to comply with these requirements, meaningful comparisons will simply not be possible. We are fully supportive of efforts to repeal the damaging and overreaching CFPB rule (H.J. Res. 50, Roger Williams, Barr, Ogles) under the Congressional Review Act; exempt lenders making fewer than 500 small business loans annually and narrow the definition of reportable loans (H.R. 1806, Hill); and require rulemaking to determine the appropriate data to be reported to address privacy concerns (H.R. 1810, Luetkemeyer).

Providing community banks the opportunity to correct a violation of consumer protection law or shortcoming in a compliance management system or protocol prior to a formal (and public) order being issued.

Structural changes to the CFPB to mitigate the damaging “whipsaw effect” of administration changes, which increase uncertainty and overly politicize the bureau. These changes should be reflected in the governance model of the bureau, as well as Congressional oversight through the appropriations process.

A review of the application of fair lending laws, which have driven community banks out of the business of making small loans to individuals and, as a result, has driven consumers to higher cost and predatory lenders.

Modernization of BSA/AML reporting thresholds, which have remained unchanged for more than 40 years. When the Bank Secrecy Act was enacted in 1970, the primary intent was to combat drug trafficking, with regulations focused on the domestic banking system and on cash transactions, which were most often conducted face-to-face. It is time to bring the AML framework in line with the current technological landscape.

IBAT believes that efforts to subject community banks to climate risk evaluations are unnecessary. We believe that community banks are well-aware and experienced in dealing with potential disruptions and severe weather events. Further, legislative or regulatory directives to constrain lending to legally operating businesses or industry sectors are unacceptable in any form.

• IBAT opposes direct government competition with the private sector and is in strong opposition to the creation of a “post office bank”. Further, we are strongly opposed to any proposals authorizing additional direct lending by the SBA and encourage streamlined applications and documentation requirements to meet the needs of smaller borrowers.

• We continue to strongly oppose efforts by the credit union industry to expand field of membership, business lending authority and raising capital from outside sources, whether by legislation or regulatory fiat. The recent purchases of community banks by credit unions are clearly an indication that these business models have few, if any, differences. We are supportive of efforts to provide for rent parity between banks and credit unions operating on military bases. Further, regulatory restrictions on the conversion of a credit union to a bank charter are significant and inappropriate. It is time to seriously examine the tax-exempt status and regulatory treatment of this ever-expanding industry that has become virtually indistinguishable from commercial banking.

• IBAT has consistently opposed the mixing of banking and commerce. Recent approvals and additional applications for FDIC insurance and access to the payments system through the chartering of an industrial loan corporation (ILC) by several fintech and commercial companies with a diverse array of other business lines are troubling. In addition to further tilting an already unlevel playing field to the detriment of community banks, the small businesses and individual customers we serve, such an arrangement would foster further consolidation and concentration in the industry, promote credit allocation, provide multiple avenues for consumer privacy risks and potentially create more risk to the FDIC fund. The FDIC should declare a moratorium on ILC insurance applications, and Congress should promptly close the ILC loophole. We were fully supportive of H.R. 5912 (Close the ILC Loophole Act) and urge your support and co-sponsorship of similar legislation in the 118th Congress.

• IBAT opposes efforts to require further analysis and evaluation of climate risk in the community banking space and believes that community banks are well-aware and experienced in dealing with potential disruptions and severe weather events. Further, legislative or regulatory directives to constrain lending to legally operating businesses or industry sectors are unacceptable in any form.

• BSA/AML compliance continues to be a costly and aggravating burden for community banks. IBAT was extremely gratified with the changes to appropriately shift the “Beneficial Ownership” responsibility to the applicant/customer and require FinCEN to serve as the data repository and are hopeful of timely implementation. We believe that a significant increase in decades-old reporting thresholds would also be appropriate.

• Lenders under the Farm Credit System umbrella are also competing directly with our banks in numerous markets and are straying from their purpose with loans to large entities and dubious ties to either agriculture or rural development. Tax-advantaged GSEs should not be competing with the private sector outside of their stated mission.

• IBAT opposes the expansion of “Durbin” routing requirements to the credit card space, especially given the heightened risk of compromised network security and significant costs to implement such substantial changes in the payments system. We urge you not to choose to pad the profit margins of giant retail conglomerates over the interests of community banks and consumers.

The United States’ banking system is the most diverse and robust system in the world, ensuring that various players meet the diverse financial needs of American individuals and businesses. Public policy proposals stand to undermine traditional banks. IBAT opposes:

• The creation of a Central Bank Digital Currency, which would undermine bank liquidity and access to credit nationwide.

• Direct government competition with the private sector and is in strong opposition to the creation of a “post office bank.”

• Direct lending by the Small Business Administration.

We further believe Congress should consider the rapid expansion of digital assets and its effect on financial stability, national security, and consumer protection. The United States would benefit from a regulatory framework of these assets to address these and other risks.