Federal banking agencies Congressional report receives mixed reviews from industry groups

In their joint report to Congress, federal banking agencies outlined initiatives designed to reduce regulatory burdens while ensuring the safety of the nation’s financial institutions.

The review — part of the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) of 1996 – was conducted by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation, and in conjunction with the National Credit Union Administration (NCUA).

The agencies described several joint actions planned or taken by the federal regulators including simplifying regulatory capital rules for community banks and savings associations, streamlining call reports, increasing the appraisal threshold for commercial real estate loans, and expanding the number of institutions eligible for less frequent examination cycles.

The National Association of Federally-Insured Credit Unions (NAFCU) praised efforts to reduce regulatory burdens on credit unions.

“The total regulatory burden on credit unions is at an all-time high. While it is encouraging to see regulators admit that there are opportunities to address outdated and unnecessary regulations, these acknowledgements should be coupled with action,” Carrie Hunt, NAFCU executive vice president of government affairs and general counsel, said.

The NCUA’s portion of the report includes several areas where NAFCU has sought reform, Hunt said.  Specifically, the report notes risk-based capital as an area the NCUA plans to “substantially revise,” which NAFCU has advocated.

NAFCU has supported legislation that would put the NCUA, the Consumer Financial Protection Bureau, and all Dodd-Frank Act measures under the EGRPRA review process.

The Independent Community Bankers of America (ICBA) were less enthusiastic. ICBA President and CEO Camden Fine said the organization is “deeply disappointed” in the report, saying agencies failed to address the overregulation of community banks.

“Today’s report falls far short of making the substantial impact on regulatory burden that ICBA has advocated in several comment letters and meetings since this EGRPRA review launched nearly three years ago. Regulators have said at these meetings that if they don’t advance real and substantive relief under this EGRPRA review, then they will have failed. Today’s report clearly shows that they have,” Fine said. “Rather than merely paying lip service to regulatory relief, ICBA looks forward to continuing to work with Congress and the Trump administration to implement meaningful reforms—including via our Plan for Prosperity—that will truly benefit local economic and job growth.”