Senator Tester Introduces Bills to Increase Community Bank Lending, Create Jobs

WASHINGTON – U.S. Senators Jon Tester (D-Mont.) and Jerry Moran (Kan.), members of the Senate Banking Committee, introduced two bills to ensure a healthy future for America’s community banks – The Community Lending Enhancement and Regulatory (CLEAR) Relief Act (S. 812) and the CLEAR Plus Act (S. 927).

The CLEAR Relief Act (S. 812) would provide regulatory relief to community banks and their customers as well as support the housing recovery. By stripping away outdated or unnecessary regulation, the legislation would help community banks focus on what they do best: providing loans to their communities and helping small businesses grow.

The CLEAR Relief Plus Act (S. 927) would harmonize the U.S. Securities and Exchange Commission (SEC) registration and deregistration thresholds for thrift holding companies to allow savings and loan holding companies to benefit from the JOBS Act – just as bank holding companies currently do – and reduce their regulatory costs. It would also provide certain healthy financial institutions the opportunity to periodically submit a shorter call report to their regulator which would save qualifying financial institutions time and money without impacting safety and soundness.

“Montana families and small businesses rely on their local community banks for the financing they need to support their families and grow their businesses,” Sen. Tester said. “We need to make sure community banks have the flexibility to continue supporting our economy with their unique brand of relationship-based lending, and that’s what these bipartisan bills do.”

“I continue to hear concerns from Kansas bankers who are hesitant to lend as they wait for the next burdensome regulation to come out of Washington,” Sen. Moran said. “With millions of Americans looking for work, our government’s first priority should be to create an environment where businesses can be created, grow and hire workers – to do that they need access to capital. Until banks are willing and able to make prudent loans to hometown customers, job creation will remain stifled and our economic recovery will continue to lag.”

Community banks play a critical role in the nation’s economic recovery, serving rural, small town and suburban customers alike. Unfortunately, some regulations and requirements make it more difficult for these banks to compete with larger financial institutions that have greater resources. This competitive disadvantage diminishes the ability of community banks to attract capital and support the credit needs of their customers and local businesses.

“This bipartisan legislation is key to unlocking the doors of local economic prosperity,” ICBA President and CEO Camden R. Fine said. “As a former community banker, and one who represents the nation’s community banks, I realize just how important regulatory relief is for community banks and the future of their communities. I urge the Senate to support these vastly important bipartisan pieces of legislation because it’s a win-win for community banks and communities of all sizes throughout the nation.”

S. 812 would:
• Exempt community banks with assets of less than $1 billion from the Sarbanes-Oxley 404(b) internal-controls assessment mandate. Because community banks’ internal control systems are monitored continually by bank examiners, they should not have to sustain the unnecessary annual expense of paying an outside audit firm for attestation work;
• Support the housing recovery by exempting from any escrow requirements any first lien mortgage held by a lender with less than $10 billion in assets; and
• Provide “qualified mortgage” status under the Consumer Financial Protection Bureau’s (CFPB) ability-to-repay rules for any mortgage originated and held in portfolio for at least three years by a lender with less than $10 billion in assets.

S. 927 would:
• Broaden access to the benefits of the JOBS Act by harmonizing the SEC registration and deregistration thresholds for savings and loan holding companies and bank holding companies; and
• Reduce the paperwork and compliance burden for well-rated, healthy institutions by offering a shorter call report form.
U.S. Representative Blaine Luetkemeyer (R-Mo.) also introduced companion legislation in the House – CLEAR Relief Act (H.R. 1233) – which similarly seeks targeted regulatory relief for small financial institutions.

S. 812 is sponsored by 18 of Sen. Moran and Tester’s U.S. Senate colleagues including U.S. Senators Jim Inhofe (R-Okla.), Rob Portman (R-Ohio), John Barrasso (R-Wyo.), Heidi Heitkamp (D-N.D.), Tom Cotton (R-Ark.), Roy Blunt (R-Mo.), Michael Enzi (R-Wyo.), Pat Roberts (R-Kan.), Mike Rounds (R-S.D.), Joe Donnelly (D-Ind.), Kelly Ayotte (R-N.H.), Chuck Grassley (R-Iowa), Martin Heinrich (D-N.M.), Pat Toomey (R-Pa.), John Boozman (R-Ark.), James Lankford (R-Okla.), Mark Kirk (R-Ill.) and Dean Heller (R-Nev.)

Click here to read the full bill text for S. 812.
Click here to read the full bill text for S. 927.