As you are likely aware, the Senate voted late last evening for final passage of S. 3217. This sweeping legislation passed by a margin of 59 - 39, on a mostly partisan basis. Both of our Texas Senators voted "Nay", with two Democrats (Cantwell - WA and Feingold - WI) voting against, and four R's (Brown - MA, Grassley - IA, Collins and Snowe from Maine) voting for passage.
There are some positives for community banks, including the Hutchison amendment to change the FDIC assessment base to assets less tangible capital. IBAT worked closely with the Senator on this initiative, and was the only Texas trade association to support this tremendous change for community banking. Other changes recognized the differences in community banks and the giants, and will provide some relief from the crush of regulations that will emanate from this complex piece of legislation.
While the bill is in some ways "less bad" after extensive changes through the amendment process, there is still much work to do as this process moves to some form of Conference Committee. We will be focusing on several issues as this bill moves forward:
- The Consumer Financial Protection Agency/Bureau is still very problematic, and has been so since the outset. Some form of this new bureaucracy will emerge in the final version, and we will continue to fight for exclusive enforcement authority for the prudential regulators, joint rulemaking and bank regulatory veto power as well as indexing of the $10 B threshold for the exemptions.
- The Durbin interchange amendment is awful, and will have a direct impact on the ability of community banks to remain competitive in the debit/credit card business. This language is not in the House version, and we will be strongly pushing for its exclusion in Conference.
- The Collins amendment was intended to force large banks and bank holding companies to meet the same capital standards as small banking companies on a consolidated basis. Unfortunately, the language creates "unintended consequences" in that trust preferred securities would no longer be considered Tier 1 capital, and favorable treatment of small bank holding companies would go away. Senator Collins has indicated that such was not her intent. The FDIC is a major player in this issue, as they are presently sitting on over $400 million in trust preferred CDOs from failed banks. We have been in contact with senior staff at the FDIC to weigh in, and will continue to work toward a reasonable and workable solution on this troubling provision.
- There are a number of other important issues we will be pushing, including retention of state legal lending limits and SOX Section 404(b) compliance exclusion for smaller companies. Additionally, there will no doubt be additional issues that surface as more eyes examine the language and amendments going forward.
The conferees should be named and a "gameplan" announced early next week, at which time we will have more clarity on the process and the players. We will be asking you to contact your respective members to deliver specific messages to their colleagues on the Conference Committee, or if we're fortunate enough to have Texas representation on that Committee (which we anticipate), direct messaging on key issues will be appropriate.
Thanks to all of you who have contacted your Senators and members of Congress during this long and tedious process, and special thanks to the ICBA for their remarkable efforts to represent community banks. Special thanks also to Senators Hutchison and Cornyn. They have both been highly supportive of community banking issues, and very responsive to our concerns. This is not over yet, and you will have an opportunity to continue to make a difference in the final bill.
Please feel free to contact Chris Williston (firstname.lastname@example.org) or Steve Scurlock (email@example.com) if you have any questions or concerns.