• “Regulatory burden” is frequently cited as a primary reason for selling a community bank. The regulatory pendulum appears to have swung back to a more aggressive approach. Many community banks simply do not have the resources to comply with the regulatory expectations, especially in the areas of CRA, fair lending and HMDA as they have evolved. We would submit that a community bank should have 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. Further, to mitigate the damaging “whipsaw effect” of administration changes on bank regulatory approach, we continue to strongly support structural changes to the CFPB to establish an oversight commission/board and provide Congress with budget authority.

Community banks spend a disproportionate amount of time and resources attempting to comply with an ever-increasing level of regulatory scrutiny in the consumer compliance area. IBAT strongly believes that consumers should be treated fairly, but also is of the opinion that the present environment is counterproductive and is making credit and banking services less accessible to those the government is purporting to protect. Further, this is clearly a result of a “one-size-fits-all” regulatory framework in which egregious behavior by some of the larger institutions has created a difficult environment for smaller banks.

A return to a much more robust level of regulatory scrutiny regarding fair lending enforcement appears to be the new reality. Sadly, the result of this practice in the past has been that banks simply stopped making small loans to individuals, thus pushing these customers into the realm of high-cost and frequently predatory lenders. Regulatory restrictions on the availability of overdraft programs have further limited opportunities for those seeking short-term credit and describing highly regulated and fully disclosed bank charges as “junk fees” is inappropriate and inaccurate.

We are particularly concerned that the CFPB’s proposed data collection rule on small business loans mandated by Section 1071 of the Dodd-Frank Act will potentially have a similar effect on small business lending. 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. With small business loans making up a significantly higher proportion of total loans, costly and burdensome reporting will have a “disparate impact” on community banks and will ultimately lead to less credit availability for small business borrowers. “Balance” would appear to be key as these areas are addressed, with a focus on cost/benefit and minimizing unintended consequences.

• 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.

• IBAT urges extreme caution and careful thought as Congress and the regulators attempt to address the ever-evolving cryptocurrency space. We remain strongly opposed to the creation of a Central Bank Digital Currency, which would undermine bank liquidity and access to credit nationwide.