Around the Capitol
The signing of S. 2155 (“Economic Growth, Regulatory Relief and Consumer Protection Act”) into law last month was a significant victory for Louisiana banks and certainly one that was hard fought and a long-time in the making. We appreciate the relentless advocacy by Louisiana bankers and board members over many years, which helped make regulatory relief legislation a reality. We also greatly appreciate the strong support for the measure amongst our Louisiana congressional delegation. S. 2155 will produce benefits for Louisiana banks, and their customers and communities. We are hopeful this accomplishment sets the stage for additional regulatory relief measures in the near future. LBA will continue pursuing such an outcome. Click here to view an ICBA document that discusses what S. 2155 means for your bank.
The next phase is implementation of the provisions of S. 2155. While some provisions of the S. 2155 regulatory reform law were written to take effect immediately, others have later specified effective dates and some are open-ended and will require rulemakings by the regulatory agencies. ABA has created a timeline document listing the bill’s key provisions and effective dates. Click here to view the timeline. That document shows that regulations are required for key provisions of the bill to become effective (among many others, this includes provisions regarding residential mortgage loans, appraisals, HMDA, escrow relief, highly capitalized banks, short form call reports and Federal Savings Association treatment).
While in Washington D.C. next month for our annual Washington Visit, we will ask the banking regulators about the status of some of these rulemakings and will report additional information as we learn more on this topic.
So what are some of the next big issues? Certainly, flood insurance reform and reauthorization, and enacting a good farm bill are important issues for Louisiana bankers. The National Flood Insurance Program is set to expire at the end of July unless extended, and the House and Senate continue to disagree on long-term reforms to the program. This may mean another short-term extension of the NFIP is in store, as opposed to a long-term reauthorization occurring this summer. LBA will stay very engaged in the process. On the farm bill, the U.S. Senate Agriculture Committee recently passed S. 3042, which keeps the process of enacting a new farm bill this year moving forward, despite challenges that remain.
Some of the other priority issues moving forward are Community Reinvestment Act modernization and Bank Secrecy Act/Anti Money Laundering reform. It was recently reported that Office of the Comptroller of the Currency is hoping to issue a long-awaited advance notice of proposed rulemaking on CRA in the coming weeks, and that OCC has been waiting to build consensus with other banking agencies. “We’re hopeful that this can be a joint agency action,” Comptroller of the Currency Joseph Otting recently said while testifying before the House Financial Services Committee. Otting emphasized that the agency’s primary goals for CRA are to expand and provide clarity regarding bank activities that receive CRA consideration, revisit the current assessment area concept and increase transparency and consistency in how CRA performance is measured.
Another priority for OCC is in addressing BSA/AML rules and supervision, Otting said. He said the federal banking regulators met last month and presented recommendations to the Treasury Department and its Financial Crimes Enforcement Network. “We do not have a risk-based examination program; it’s one-size-fits-all,” he said. “We need to bring balance.” He also emphasized the need to raise the $10,000 threshold for Currency Transaction Reports, which he said traps law-abiding business owners and bank customers with accusations of structuring. “We produce a lot of paper and I’m not sure we get to the point where we’re catching the right people.”
In addition to the banking regulators reviewing BSA/AML requirements, Congress is also looking at this issue. Last week Reps. Steve Pearce (R-N.M.) and Blaine Luetkemeyer (R-Mo.) introduced an LBA-supported bill (H.R. 6068) that would update several elements of the BSA/AML laws and regulations. H.R. 6068 would raise the threshold for when CTRs must be filed from $10,000 to $30,000, as well as increase the monetary threshold for Suspicious Activity Reports. The bill would also provide an 18-month enforcement safe harbor for financial institutions making good-faith efforts to comply with the recently effective customer due diligence rule. Additionally, it would facilitate SAR sharing with foreign bank affiliates, give the Treasury Department a more prominent role in coordinating AML policy, and require studies of streamlining CTR and SAR reporting requirements and of the effectiveness of new beneficial ownership requirements, among other things.
Above are just some examples of the many important priorities remaining during this Congress and beyond. With the passage of S. 2155, we saw that hard work does pay off. Please continue to participate in our grassroots and government relations actives. Thanks again for your support and continue to let us know about the challenges you are facing and the priorities you want us focused on.