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U.S. agencies: Basel revisions don't apply to community banks

U.S. agencies: Basel revisions don't apply to community banks

ICBA News Watch this week / US Weekly Bell


WASHINGTON, D.C., Weeks beginning 7 and 14 December 2015


Agencies: Basel Revisions Don't Apply to Community Banks
Federal banking regulators clarified that the Basel Committee on Banking Supervision's proposed revisions to the Standardized Approach for credit risk would apply primarily to large, internationally active banking organizations and not to community banks. The regulatory agencies said they will consider the proposals identified in the consultative paper with the goal of developing a stronger and more transparent risk-based capital framework for the largest institutions. FacebookLinkedInTwitterAddThis


Budget Deal Includes Beneficial Tax Extenders, Cyber Legislation

An omnibus budget deal released by congressional negotiators includes ICBA-supported tax extenders and cybersecurity information-sharing legislation. However, the year-end legislative package, which is expected to clear Congress by the end of the week, left out several regulatory relief measures that ICBA and community bankers have been advocating.

Following this month's passage of ICBA-backed regulatory relief measures in the FAST Act highway law, the omnibus agreement would have been the perfect vehicle to advance additional community bank relief, ICBA said in a statement. ICBA has been working to include Plan for Prosperity provisions offering relief from mortgage regulations, Basel III capital requirements, the Volcker Rule, regulatory exams and quarterly reporting requirements

On the plus side, the deal:

  • includes the ICBA-advocated Cybersecurity Information Sharing Act, which encourages the public and private sectors to share critical cyber-threat information,
  • requires regulators to study and report to Congress the effect of the Basel III capital requirements on mortgage-servicing assets,
  • includes a $3 billion increase in funds for the Small Business Administration's 7(a) guaranteed loan program,
  • reauthorizes SBA's expired 504 refinance program,
  • continues fee waivers for loans to veterans,
  • includes a permanent five year S-Corp recognition period for built-in gains,
  • permanently extends the S-Corp stock basis adjustment for charitable contributions of property, and
  • makes permanent a $500,000 Section 179 expensing limit.

House and Senate votes on the spending and tax extender bills are expected today and tomorrow. ICBA will continue working with lawmakers to expand upon the regulatory relief provisions contained in​ the highway law. >> Read ICBA Release. FacebookLinkedInTwitterAddThis


ICBA Takes on FASB Claims About Costly Accounting Plan
ICBA pushed back against comments from Financial Accounting Standards Board Chairman Russell Golden justifying FASB's accounting standards update for loan-loss reserves. ICBA President and CEO Cam Fine noted in a statement that federal regulators are projecting that FASB's proposed standards would force banks to raise their loan-loss reserves by 30 to 50 percent.

Countering Golden's fallacious claims that community banks contributed to the financial crisis, Fine noted that the industry and the communities it serves were badly harmed by the fallout of a calamity that originated on Wall Street. Rather than requiring all banks to record a provision for credit losses the moment they make a loan—removing community bankers' discretion in making localized financial decisions—Fine again called on FASB to consider ICBA's alternative model that would base loan-loss provisions on historical losses for similar assets.

Golden's comments demonstrate the continued need for community bankers to reach out to FASB in opposition to its accounting standards update via ICBA's Be Heard grassroots website. ICBA's custom letter to FASB lays out the problems with its Current Expected Credit Loss plan and advocates ICBA's alternative for community banks. Read ICBA Release. Contact FASB Today! FacebookLinkedInTwitterAddThis


ICBA Releases Letter Taking on FASB Com​ments
ICBA publicly released its letter taking Financial Accounting Standards Board Chairman Russell Golden to task for recent claims that community banks played a "major part" in the financial crisis. The ICBA Executive Committee wrote in the letter that Golden's comments reflect a lack of understanding and disregard for community banks and a selective historical view of the Wall Street financial crisis.

The ICBA Executive Committee noted that the financial collapse originated on Wall Street and that community banks fared well due to the relationship banking model that FASB's loan-loss proposal directly contradicts. ICBA leaders also criticized Golden's denials of the excessive cost and complexity inherent in FASB's Current Expected Credit Loss model, noting that regulators have predicted a resulting 30 to 50 percent hike in loan-loss reserves.

Golden's comments demonstrate the need for community bankers to continue reaching out to FASB in opposition to its accounting standards update via ICBA's Be Heard grassroots website. ICBA's custom letter to FASB lays out the problems with its CECL plan and advocates ICBA's alternative for community banks. >> Read ICBA Letter. >> Read ICBA Release. >> Contact FASB Today. FacebookLinkedInTwitterAddThis


ICBA-Advocated Data Security Act Passes Committee
The House Financial Services Committee approved ICBA-advocated legislation requiring all entities that handle sensitive financial data to have robust data-security processes in place, like those already mandated for banks. The bipartisan Data Security Act (H.R. 2205), introduced by Reps. Randy Neugebauer (R-Texas) and John Carney (D-Del.), passed on a 46-9 vote.

"Following the recent deluge of high-profile data breaches at major retailers, the Data Security Act will hold these companies to common-sense data-security standards like those already required of banks under the Gramm-Leach-Bliley Act," ICBA President and CEO Cam Fine said in a statement.

The committee also advanced H.R. 3791, ICBA-supported legislation introduced by Rep. Mia Love (R-Utah) that would raise the consolidated assets threshold under the small bank holding company policy statement from $1 billion to $5 billion in assets. H.R. 3791, which passed 33-21, is part of ICBA's Plan for Prosperity regulatory relief agenda.     

ICBA continued its strong support for these measures ahead of the markup, including in an ICBA letter and coalition letter to the committee this week, and will continue working to advance these measures through Congress. >> Read ICBA Release. FacebookLinkedInTwitterAddThis


Email Still Key Malware Threat
Community banks can expect frau​​dsters to continue using email to inject malware. FS-ISAC recently published a best practices paper and resource guide on destructive malware, which are designated TLP-Green and not to be shared with the news media. With news coverage sowing fear and uncertainty in consumers, community banks will need to reassure customers of their defenses while keeping security teams focused on maintaining good defenses against cyber-intrusions. >> Access Best Practices Paper.  >> Access Resource Guide. FacebookLinkedInTwitterAddThis


​FS-ISAC Spotlights Increased Cyber-Threat Level​
FS-ISAC's latest community institution risk report covers the increased cyber-threat level, a recent FBI alert on corporate information accessed to facilitate securities fraud, and security predictions for 2016. >>Read FS-ISAC's Report.FacebookLinkedInTwitterAddThis

Communication - institutional & commercial; Basel III; Proportionality