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WASHINGTON, D.C. – U.S. Senators Jerry Moran (R-Kan.), Jon Tester (D-Mont.) and Mark Kirk (R-Ill.) – members of the Senate Banking Committee – today introduced legislation to ensure a healthy future for America’s community banks. The Community Lending Enhancement and Regulatory (CLEAR) Relief Act, S. 1349, would provide much needed regulatory relief to community banks and their customers as well as support the housing recovery. By stripping away outdated or unnecessary regulation, the CLEAR Relief Act would help community banks focus on what they do best: providing loans to their communities and helping small businesses grow.

"With 12 million Americans looking for work, our government’s first priority should be to create an environment where businesses can be created, grow and hire workers,” Sen. Moran said. “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. 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."

"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 this bipartisan bill does."

"Illinois has over 580 community banks - the second-most of any state in the US,” said Sen. Kirk. “These banks understand their customers’ financial needs and their ability to repay loans, and they continue to lend even in times of financial crisis. In an era of new regulations that hamper community banks' ability to meet the credit needs of their communities, I am proud to join Senators Moran and Tester in this bipartisan bill that aims to address the unique differences between mega global financial institutions and community banks."

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 this vastly important bipartisan legislation because it’s a win-win for community banks and communities of all sizes throughout the nation.” 

The CLEAR Relief Act includes 4 provisions, including those that would:

  • Exempt community banks with assets 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.
  • Require the Federal Reserve to revise the Small Bank Holding Company Policy Statement by increasing the qualifying asset threshold from $500 million to $5 billion. This will help ease capital requirements for small bank and thrift holding companies.
  • 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.

Sen. Moran is a member of Senate Banking Committee’s Subcommittee on Financial Institutions and Consumer Protection. He is committed to highlighting and solving the challenges facing community banks in the current regulatory environment, and providing these financial institutions with relief.

Sen. Tester is the Chairman of the Senate Banking Committee’s Subcommittee on Securities, Insurance, and Investment. A strong advocate for rural America’s smaller financial institutions, he made sure that community banks continue to have equal access to the housing finance market in his Housing Finance Reform and Taxpayer Protection Act.

U.S. Representative Blaine Luetkemeyer (R-Mo.), has already introduced the CLEAR Relief Act, H.R. 1750, which similarly seeks targeted regulatory relief for small financial institutions.



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