Farmer Assistance and Revenue Mitigation Act of 2024

Supported H.R. 10045, the Farmer Assistance and Revenue Mitigation Act of 2024

Client expense: $30,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

CBAI Federal Policy Priorities - Bank Regulators Fulfilling Their Responsibilities Regarding Check Fraud Including Reimbursement for Fraudulently Altered Returned Checks Community banks continue to experience a growing problem of check fraud including reimbursements for fraudulently altered checks drawn on their customers accounts. The problem in the banking industry has been identified by our members as being enabled by the nations largest banks and credit unions, where fraudulent accounts are opened and fraudulent checks are deposited, which clear back to many community banks, harming them and their customers, in addition to undermining the publics confidence in the nations banking and financial system. CBAI urges the regulators to fulfill their responsibilities to address this problem by initiating Joint Supervisory Guidance and ramping up their examination and enforcement against the largest financial institutions to ensure they are held accountable for their apparent safety and soundness and compliance inadequacies. Agriculture and Rural America In the 119th Congress, CBAI strongly advocates for the passage of a multi-year Farm Bill that provides ample funding for commodity programs and rural broadband, maintains strong crop insurance products, approves higher USDA-guaranteed loan limits and expedited USDA Express program approvals, and prevents the expansion of the Farm Credit System into non-farm lending activities and opposes their exemption from the Section 1071 small business data reporting requirements. Community banks and their agricultural borrowers merit favorable tax treatment for interest income on ag loans secured by ag property and primary residences in ag communities. This will help sustain and strengthen ag lending by community banks and reduce interest expenses for their banks ag borrowers. New Credit Card Routing Mandates Efforts to mandate credit card routing is ill conceived policymaking that will fail to benefit consumers by forcing a costly overhaul of the credit card payments landscape. The beneficiaries of the new mandates will be the largest merchants (not small businesses) which will not pass their savings on to consumers. CBAI supports greater competition and opposes concentrations in financial services represented by the too-big-to-fail banks and oligopolies like VISA and MasterCard, but misguided legislation is not the solution to the problems they create. Responsible Regulation of Digital Assets - Cryptocurrency, Central Bank Digital Currency (CBDC), Stablecoins and Decentralized Finance (DeFi) The risks posed by digital assets (cryptocurrency), central Bank digital currency (CBDC) and stablecoin, and decentralized finance (DeFi) are enormous, as well as the consequences for monetary policy, our financial system, and the banking industry. They pose threats to the privacy and security of consumers and small businesses. There is no single regulator responsible for this rapidly growing sector which combines elements of currency, payments and investments, and there is insufficient transparency and lack of accountability in this ecosystem. Policymakers must develop and implement a consistent federal regulatory framework that does not permit digital assets and DeFi to offer financial services or products without being subject to the same regulations as community banks and deny nonbank stablecoin issuers access to the Federal Reserve master account, both of which would threaten the essential and highly successful business model of responsible community banks. The Federal Home Loan Banks (FHLBs) in Their Comprehensive Review by the FHFA The FHLB System is an admirable public-private partnership where the FHLBs banks provide short-term liquidity, long-term funding, mortgage-related products, and other financial services to help their owner-members weather crisis and provide affordable credit to support the local communities. FHLBanks contributes a substantial portion of its income to affordable housing and community development in their respective districts. The Federal Housing Finance Agency (FHFA) has embarked on a comprehensive review of the FHLBs. CBAI recommends that the FHFA should not seek to disrupt the cooperative structure, regional nature, special functions, and the unique purposes of the FHLBanks. Reasonable Regulatory Rules and Implementation Small Business Data Collection A Final Rule was published in March of 2023. The Final Rule was flawed because it exempted too few financial institutions and set the revenue threshold so high that it now encompasses too many businesses, in addition to raising privacy and other concerns. There have been legal challenges to the Final Rule. CBAI supports the reasonable implementation of this reporting requirement and opposed efforts by Farm Credit to exempt its lenders. Customer Data Sharing A Final Rule was published in October of 2024. The Final Rule was flawed because it exempted too few financial institutions, ignores the costs of providing this service to consumers and does not adequately protect consumers and their community banks or compensate them from any losses related to data misuse, breaches and fraud. Modernizing the Community Reinvestment Act The Final Joint Rule was published in October of 2023. The Final Joint Rule was flawed because it exempted too few financial institutions and for many other reasons. There have been legal challenges to the Final Joint Rule. CBAI supports the reasonable implementation of the CRA that includes credit unions being subject to the CRA. Reporting Beneficial Ownership Information CBAI supports shifting the burden of collecting the BOI of community bank accountholders to the Financial Crimes Enforcement Network (FinCEN). The current requirement is flawed because it does not relieve community banks from this burden. There have been legal challenges to the reporting requirements. CBAI supports making FinCEN the sole repository of BOI and relieving community banks from this burden. Federal Safe Harbor for Banking Cannabis-Related Businesses Without taking a position on the legalization of cannabis, CBAI supports a federal safe harbor from sanctions for financial institutions that choose to serve legally compliant cannabis-related businesses (CRBs) and ancillary businesses that have commercial relationships with CBRs, in states where cannabis is legal. Allowing these businesses access to the traditional banking system and its services, versus operating exclusively in cash, is a public safety issue. Harmful Climate Risk Regulations Community bankers high-contact and relationship-based lending model ensures that controls are in place to monitor climate risks on an ongoing basis. CBAI opposes any climate change regulations that will adversely impact community banks and their ability to support their customers and communities. Meaningful Regulatory Relief for Community Banks and Regulatory Overreach CBAI joins the ICBA in supporting a more efficient system of rules and regulations, unbiased laws governing the financial sector, a safer and more secure business environment, and more efficient agricultural policies to support the nations economic growth and development in all parts of the country. Many new and significant rules have been approved which individually and collectively present incredible challenges for community banks which are less likely to be able to comply with these many new requirements. CBAI urges carefully constructed legislation and regulation, robust congressional oversight of the regulators, and a moratorium on new rules until the impact of existing rules can be thoroughly assessed to minimize the damages to community banks. Credit Unions and Their Expanded Powers Credit unions have long since strayed from their founding purposes, weaponizing their competitive advantages, and are virtually indistinguishable from tax-paying community banks. Credit union acquisitions of community banks are increasing at an alarming pace and is an abuse of the tax code which exacerbates consolidation among financial institutions, negatively impacts all taxpayers, and reduces consumer choice. Credit union abuse of their tax exemption is an existential threat to community banks and the communities they serve and must end. Farm Credit System and its Expanded Powers The Farm Credit System (FCS) has long since strayed from its founding purpose, weaponizing its competitive advantages against community banks. The FCS is the only government sponsored entity (GSE) that competes directly with community banks. Its lenders leverage their tax and funding advantages as a GSE to steal away many of the best agriculture loans from community banks, which is contrary to their mission of serving young and beginning farmers and ranchers. This blatant and continued discrimination against community banks must end, the FCS competitive advantages must be reined in, and the playing field must be leveled for community banks. Enhanced Data, Cyber and Payment Card Security (Data Security) The need for data security is paramount in financial services. Community banks are strong guardians of the security and confidentiality of their customers information. Enhanced security standards should be enforced through a tiered system where the more restrictive rules are imposed on the largest members of the financial system and economy (bot community banks) where their lapses pose the greatest threat to the largest number of consumers. Sound Principles for Housing Government Sponsored Entity (GSE) Reform Reforms in government support for housing finance remain important to the future of the housing market and the U.S. economy. Unlike other private aggregators or investors, the GSEs have a mandate to serve all markets at all times, which is critical to maintaining liquidity particularly when markets are experiencing financial stress and private capital moves to the sidelines. Exiting receivership includes building capital to successfully operate within a broader housing finance framework, and bipartisan agreement on the proper role of the housing GSEs and the programs necessary to fulfill reasonable and consistent housing goals. The Federal Reserves Role in Payments System Improvement (FedNow Service) The FedNow Service is a significant payments system improvement. The payments system must not be monopolized by The Clearing House and its large bank owners with their RTP Network. Community banks, consumers and small businesses must rely on the Federal Reserve to provide access to a safe and secure payments system, which requires the Fed to play a preeminent role in system improvements. The FedNow Service should have robust capabilities, should be interoperable with other payments systems and should only be accessed by regulated financial institutions - not Amazon, Walmart, and the many fintechs that are seeking direct access to the payment rails. Finally Address the Risks of Too-Big-To-Fail Banks and Financial Firms, to Protect Community Banks, our Financial System, the Economy, and American Taxpayers from Future Bailouts The Great Financial Crisis, and the mini crisis caused by the failures of SVB and SBNY, were caused by the misconduct of the nations largest banks and financial firms and by banking regulators that did not ensure the safety and soundness of these financial behemoths. The megabanks and financial firms have proven, at great cost to American taxpayers, that they cannot be managed, supervised, disciplined or prosecuted. They are clearly too-big-to-change, too-big-to-fail, and must be downsized. This necessary policy objective can be accomplished by separating the traditional deposit-taking and lending activities of the largest banks from their speculative investment banking, securities underwriting, and market making activities. The time to act is now before the next financial crisis. (House and Senate, OCC, FDIC) Legislation and Regulation - H.R. 3139 or the ACRE Act (All Sections) to provide that interest income on loans to ag borrowers secured by ag assets or residences in ag areas will be considered exempt for income tax purposes (House) H.R. 10045 (All Sections) to provide emergency assistance to producers of eligible commodities for which the expected revenue on crop year 2024 is below projections (House) Letters - Comment Letter to the OCC, FDIC and the Federal Reserve regarding the EGRPRA Review concerning tiered regulations, consumer protections, directors/officers/employees, money laundering/BSA/AML, FinCEN and BOI reporting, and check fraud and reimbursements for community banks (OCC, FDIC, Federal Reserve) Action Alerts - None Miscellaneous - Complaint to the Farm Credit Administrations Office of Inspector General regarding alleged illegal residential mortgage loan made by an FCS lender in a town which has a population in excess of 10,000 people which would be in violation of FCSs residential mortgage lending authority (Farm Credit) Deposit Check Fraud - The prompt and reasonable reimbursements for community banks from the largest banks for fraudulently altered return checks, and the largest banks opening fraudulent accounts into which fraud items are being deposited, including - joint supervisory guidance addressed to the largest banks for their apparent management and compliance lapses, enhanced supervision, regulation and enforcement against the largest banks for CDD and CIP compliance - retaining the OCCs check fraud complaint email address (portal) - escalating complaints member resource - U.S. House member letter to the banking regulators, NCUA and FinCEN requesting briefing (House, OCC, Federal Reserve)

CBAI Federal Policy Priorities - Bank Regulators Fulfilling Their Responsibilities Regarding Check Fraud Including Reimbursement for Fraudulently Altered Returned Checks Community banks continue to experience a growing problem of check fraud including reimbursements for fraudulently altered checks drawn on their customers accounts. The problem in the banking industry has been identified by our members as being enabled by the nations largest banks and credit unions, where fraudulent accounts are opened and fraudulent checks are deposited, which clear back to many community banks, harming them and their customers, in addition to undermining the publics confidence in the nations banking and financial system. CBAI urges the regulators to fulfill their responsibilities to address this problem by initiating Joint Supervisory Guidance and ramping up their examination and enforcement against the largest financial institutions to ensure they are held accountable for their apparent safety and soundness and compliance inadequacies. Agriculture and Rural America In the 119th Congress, CBAI strongly advocates for the passage of a multi-year Farm Bill that provides ample funding for commodity programs and rural broadband, maintains strong crop insurance products, approves higher USDA-guaranteed loan limits and expedited USDA Express program approvals, and prevents the expansion of the Farm Credit System into non-farm lending activities and opposes their exemption from the Section 1071 small business data reporting requirements. Community banks and their agricultural borrowers merit favorable tax treatment for interest income on ag loans secured by ag property and primary residences in ag communities. This will help sustain and strengthen ag lending by community banks and reduce interest expenses for their banks ag borrowers. Legitimate Bank Service Charges and Fees are Not Hidden, Exploitive and Junk Fees and Necessary Consumer Financial Responsibility There have been misguided characterizations that community bank service charges and fees are exploitive, unfair and even unlawful. What some have disparaging called Junk fees are bank fees and service charges that are justified, disclosed, and accepted by the consumers who utilize bank products and services. CBAI does not support practices that abuse consumers, but policymakers must accept the position that it is the consumers responsibility to maintain a positive deposit account balance and make their debt payments in a timely manner. It is wrong for policymakers to excuse irresponsible consumer financial behavior and doing so may encourage unacceptable behavior. Realistic Perspective on Financial Inclusion CBAI strongly supports financial inclusion and believes every responsible and able consumer and business should have a banking relationship with their local community bank. There is indisputable proof that the banking industry excels at serving the banking needs of American households. CBAI supports government initiatives that educate consumers and encourage financial inclusion, but it is not the role of federal, state or governments to provide banking services. Governments can assist the private sector in financial inclusion through incentives to promote community banks offering basic accounts and small-dollar consumer loans, especially to low- and middle-income consumers, which are those most likely to be unbanked or underbanked. Protecting Consumers by Restricting the Sale of Mortgage Trigger Leads Trigger leads are generated by credit reporting agencies that contact information about consumers applying for residential mortgage loans to mortgage marketers. This practice is permitted but restricted. Our members report that many of these marketing communications fall short of the legal requirements. Trigger leads compromise consumer privacy, create a flood of unwanted (even harassing) solicitations, create confusion and result in complaints. CBAI supports legislation that would restrict credit reporting agencies from selling consumer contact information unless the applicant has opted in to receive these solicitations. Governments Unnecessary Intrusion into Banking and Lending Which Displaces Community Banks SBA Direct Lending Community banks and the SBA have a long, beneficial and cooperative private sector/public sector relationship and the SBA has historically not competed with banks in lending to businesses. Community banks are far superior in prudently underwriting and administering commercial lending relationships. The SBA originating and disbursing 7(a) loans will result in credit underwriting lapses which will put billions of taxpayer dollars at risk of loss. CBAI urges policymakers to prohibit the SBA from making direct 7(a) loans or otherwise expanding the institutions beyond well-regulated banks that could originate SBA loans. Postal Banking CBAI believes postal banking is misguided and views any entry by the USPS into banking services as a significant and government-sponsored competitive threat to private-sector and tax-paying community banks. By better utilizing the vast network of community banks, which are already fully staffed by experienced and dedicated banking professionals, there is no need for the USPS to develop and offer banking services. Public Banking CBAI believes public banking is misguided and views any entry by federal, state or local governments into banking services as a significant and government-sponsored competitive threat to private-sector and tax-paying community banks. By better utilizing the vast network of community banks, which are already fully staffed by experienced and dedicated banking professionals, there is no need for the government to offer banking services. New Credit Card Routing Mandates Efforts to mandate credit card routing is ill conceived policymaking that will fail to benefit consumers by forcing a costly overhaul of the credit card payments landscape. The beneficiaries of the new mandates will be the largest merchants (not small businesses) which will not pass their savings on to consumers. CBAI supports greater competition and opposes concentrations in financial services represented by the too-big-to-fail banks and oligopolies like VISA and MasterCard, but misguided legislation is not the solution to the problems they create. Responsible Regulation of Digital Assets - Cryptocurrency, Central Bank Digital Currency (CBDC), Stablecoins and Decentralized Finance (DeFi) The risks posed by digital assets (cryptocurrency), central Bank digital currency (CBDC) and stablecoin, and decentralized finance (DeFi) are enormous, as well as the consequences for monetary policy, our financial system, and the banking industry. They pose threats to the privacy and security of consumers and small businesses. There is no single regulator responsible for this rapidly growing sector which combines elements of currency, payments and investments, and there is insufficient transparency and lack of accountability in this ecosystem. Policymakers must develop and implement a consistent federal regulatory framework that does not permit digital assets and DeFi to offer financial services or products without being subject to the same regulations as community banks and deny nonbank stablecoin issuers access to the Federal Reserve master account, both of which would threaten the essential and highly successful business model of responsible community banks. The Federal Home Loan Banks (FHLBs) in Their Comprehensive Review by the FHFA The FHLB System is an admirable public-private partnership where the FHLBs banks provide short-term liquidity, long-term funding, mortgage-related products, and other financial services to help their owner-members weather crisis and provide affordable credit to support the local communities. FHLBanks contributes a substantial portion of its income to affordable housing and community development in their respective districts. The Federal Housing Finance Agency (FHFA) has embarked on a comprehensive review of the FHLBs. CBAI recommends that the FHFA should not seek to disrupt the cooperative structure, regional nature, special functions, and the unique purposes of the FHLBanks. Reasonable Regulatory Rules and Implementation Small Business Data Collection A Final Rule was published in March of 2023. The Final Rule was flawed because it exempted too few financial institutions and set the revenue threshold so high that it now encompasses too many businesses, in addition to raising privacy and other concerns. There have been legal challenges to the Final Rule. CBAI supports the reasonable implementation of this reporting requirement and opposed efforts by Farm Credit to exempt its lenders. Customer Data Sharing A Final Rule was published in October of 2024. The Final Rule was flawed because it exempted too few financial institutions, ignores the costs of providing this service to consumers and does not adequately protect consumers and their community banks or compensate them from any losses related to data misuse, breaches and fraud. Modernizing the Community Reinvestment Act The Final Joint Rule was published in October of 2023. The Final Joint Rule was flawed because it exempted too few financial institutions and for many other reasons. There have been legal challenges to the Final Joint Rule. CBAI supports the reasonable implementation of the CRA that includes credit unions being subject to the CRA. Reporting Beneficial Ownership Information CBAI supports shifting the burden of collecting the BOI of community bank accountholders to the Financial Crimes Enforcement Network (FinCEN). The current requirement is flawed because it does not relieve community banks from this burden. There have been legal challenges to the reporting requirements. CBAI supports making FinCEN the sole repository of BOI and relieving community banks from this burden. Federal Safe Harbor for Banking Cannabis-Related Businesses Without taking a position on the legalization of cannabis, CBAI supports a federal safe harbor from sanctions for financial institutions that choose to serve legally compliant cannabis-related businesses (CRBs) and ancillary businesses that have commercial relationships with CBRs, in states where cannabis is legal. Allowing these businesses access to the traditional banking system and its services, versus operating exclusively in cash, is a public safety issue. Closing the Industrial Loan Company (ILC) Regulatory Loophole CBAI has consistently supported the long-standing American policy of prohibiting the mixing of banking and commerce, which ILCs represent, because of the risks they pose to the financial system, the FDICs DIF, our economy, consumers and American taxpayers. The risk posed by ILCs, particularly large technology and ecommerce giants, is a regulatory loophole that allows their holding companies to escape from consolidated federal supervision and regulation. This loophole must be closed. Appropriate Regulation of Fintechs and Innovations in Financial Services The pace of innovation in financial services has been accelerating. Many of these new services are offered by financial technology companies - better known as fintechs. Financial innovation presents community banks with challenges and opportunities. Policymakers should reasonably assist community banks to prepare for this new and evolving era, not pose unreasonable requirements on them, and not give fintechs any competitive advantages over community banks by subjecting them to lesser regulatory requirements. Prescriptive and Intrusive FDIC Corporate Governance Guidelines In 2023, the FDIC proposed new corporate governance and risk management guidelines. Although the guidelines only apply to covered institutions with $10 billion or more in assets, these overly prescriptive guidelines apply the same set of standards to larger community banks as they do to the nations largest banks. These guidelines would make it even more difficult to attract new directors, particularly those in rural areas. Harmful Climate Risk Regulations Community bankers high-contact and relationship-based lending model ensures that controls are in place to monitor climate risks on an ongoing basis. CBAI opposes any climate change regulations that will adversely impact community banks and their ability to support their customers and communities. Meaningful Regulatory Relief for Community Banks and Regulatory Overreach CBAI joins the ICBA in supporting a more efficient system of rules and regulations, unbiased laws governing the financial sector, a safer and more secure business environment, and more efficient agricultural policies to support the nations economic growth and development in all parts of the country. Many new and significant rules have been approved which individually and collectively present incredible challenges for community banks which are less likely to be able to comply with these many new requirements. CBAI urges carefully constructed legislation and regulation, robust congressional oversight of the regulators, and a moratorium on new rules until the impact of existing rules can be thoroughly assessed to minimize the damages to community banks. Credit Unions and Their Expanded Powers Credit unions have long since strayed from their founding purposes, weaponizing their competitive advantages, and are virtually indistinguishable from tax-paying community banks. Credit union acquisitions of community banks are increasing at an alarming pace and is an abuse of the tax code which exacerbates consolidation among financial institutions, negatively impacts all taxpayers, and reduces consumer choice. Credit union abuse of their tax exemption is an existential threat to community banks and the communities they serve and must end. Farm Credit System and its Expanded Powers The Farm Credit System (FCS) has long since strayed from its founding purpose, weaponizing its competitive advantages against community banks. The FCS is the only government sponsored entity (GSE) that competes directly with community banks. Its lenders leverage their tax and funding advantages as a GSE to steal away many of the best agriculture loans from community banks, which is contrary to their mission of serving young and beginning farmers and ranchers. This blatant and continued discrimination against community banks must end, the FCS competitive advantages must be reined in, and the playing field must be leveled for community banks. Enhanced Data, Cyber and Payment Card Security (Data Security) The need for data security is paramount in financial services. Community banks are strong guardians of the security and confidentiality of their customers information. Enhanced security standards should be enforced through a tiered system where the more restrictive rules are imposed on the largest members of the financial system and economy (bot community banks) where their lapses pose the greatest threat to the largest number of consumers. Consumer Financial Protection Bureau (CFPB) Reform and Exemptions for Community Banks CFPBs regulations must provide community banks with the flexibility to meet the needs of their customers - not a one-size-fits-all approach. They must not be burdened with additional and unnecessary regulatory requirements that would prevent them from serving their customers and communities. In reforming the CFPB, the single director governance should be replaced by a five-member board or commission. A broader definition of firms that grant credit should be subject to the CFPB rules, and they should be robustly supervised and examined. The focus of any enhanced regulation of financial products should be on the largest banks and financial firms, the unregulated shadow financial industry, and fintechs - not community banks. De Novo Community Bank Formation, the Dual Banking System, and Charter Choice The chartering of many newly chartered (de novo) community banks is vitally important to maintaining a strong, growing, evolving and vibrant profession in the face of continued banking industry consolidation. Hand in hand with renewed de novo bank formation is the importance of maintaining the dual banking system, where chartering and supervision are divided between the federal government and the states, and where the federal government supervision and regulation is divided between the Federal Reserve, Office of Comptroller of the Currency, and the Federal Deposit Insurance Corporation. Community banks should be able to choose the banking charter and associated prudential regulator that best fits their unique needs and business model. Sound Principles for Housing Government Sponsored Entity (GSE) Reform Reforms in government support for housing finance remain important to the future of the housing market and the U.S. economy. Unlike other private aggregators or investors, the GSEs have a mandate to serve all markets at all times, which is critical to maintaining liquidity particularly when markets are experiencing financial stress and private capital moves to the sidelines. Exiting receivership includes building capital to successfully operate within a broader housing finance framework, and bipartisan agreement on the proper role of the housing GSEs and the programs necessary to fulfill reasonable and consistent housing goals. Responsible Bank Merger Activity Some community banks have found it helpful to merge with other community banks to be able to spread the significant and escalating costs of regulatory compliance, cybersecurity, technology and innovation to remain highly competitive. Restrictive bank merger legislation or regulations should not apply to community banks. The Federal Reserves Role in Payments System Improvement (FedNow Service) The FedNow Service is a significant payments system improvement. The payments system must not be monopolized by The Clearing House and its large bank owners with their RTP Network. Community banks, consumers and small businesses must rely on the Federal Reserve to provide access to a safe and secure payments system, which requires the Fed to play a preeminent role in system improvements. The FedNow Service should have robust capabilities, should be interoperable with other payments systems and should only be accessed by regulated financial institutions - not Amazon, Walmart, and the many fintechs that are seeking direct access to the payment rails. Finally Address the Risks of Too-Big-To-Fail (and now Too-Big-To-Not-Insure) Banks and Financial Firms, to Protect Community Banks, our Financial System, the Economy, and American Taxpayers from Future Bailouts Too-Big-To-Not-Insure The 2023 failures of Silicon Valley Bank and Signature Bank revealed that policymakers have created a new category of very large banks - Too-Big-To-Not-Insure (although they will fail) because the FDIC decided to insure 100% of the uninsured deposits of these two failed banks. There must be accountability by both the banks and the regulators for their respective failures. In the future, if systemically important financial institutions (SIFIs) cause losses to the DIF then SIFIs should be responsible for reimbursing the DIF for all the losses they created. Too-Big-To-Fail The Great Financial Crisis, and the mini crisis caused by the failures of SVB and SBNY, were caused by the misconduct of the nations largest banks and financial firms and by banking regulators that did not ensure the safety and soundness of these financial behemoths. The megabanks and financial firms have proven, at great cost to American taxpayers, that they cannot be managed, supervised, disciplined or prosecuted. They are clearly too-big-to-change, too-big-to-fail, and must be downsized. This necessary policy objective can be accomplished by separating the traditional deposit-taking and lending activities of the largest banks from their speculative investment banking, securities underwriting, and market making activities. The time to act is now before the next financial crisis. (House and Senate, OCC, FDIC) Legislation and Regulation - H.R. 10045 (All Sections) to provide emergency assistance to producers of eligible commodities for which the expected revenue on crop year 2024 is below projections (House) H.R. 3139 or the ACRE Act (All Sections) to provide that interest income on loans to ag borrowers secured by ag assets or residences in ag areas will be considered exempt for income tax purposes (House) S. 3502 or the Homebuyers Privacy Protection Act (Senate) (All Sections) and H.R. 7297 (House) (All Sections) are bills to prohibit credit reporting agencies from providing a credit report not initiated by a consumer if the report is being provided on the basis that the consumer has had a credit inquiry regarding a home mortgage loan. This practice, known as producing a trigger lead, provides notice to other mortgage lenders that the consumer is seeking a mortgage loan (Senate and House) S. 1838 or the Credit Card Competition Act (All Sections) to provide competition into the routing of credit card transactions (Senate) Letters - Comment Letter to the FDIC regarding Industrial Loan Companies (ILCs): NPR - Parent Companies of Industrial Banks and Industrial Loan Companies; RIN 3064-AF88 (FDIC) Comment Letter to the OCC, FDIC and the Federal Reserve regarding the EGRPRA Review concerning tiered regulations, consumer protections, directors/officers/employees, money laundering/BSA/AML, FinCEN and BOI reporting, and check fraud and reimbursements for community banks (OCC, FDIC, Federal Reserve) Comment Letter to the FDIC regarding brokered Deposits: NPR - Unsafe and Unsound Banking Practices; Brokered Deposit Restrictions - RIN 3064-AF99 (FDIC) Comment Letter to the Federal Reserve regarding Discount Window Borrowings: RFI - Operational Aspects of Federal Reserve Bank Extensions of thew Discount Window and Intraday Credit - Docket No. OP-1838 (Federal Reserve) Action Alerts - None Miscellaneous - Complaint to the Farm Credit Administrations Office of Inspector General regarding alleged illegal residential mortgage loan made by an FCS lender in a town which has a population in excess of 10,000 people which would be in violation of FCSs residential mortgage lending authority (Farm Credit) Concerns expressed to the Federal Housing Finance Agency regarding their Advisory Bulletin that focuses on credit risk management expectations for FHLBs (FHFA) Deposit Check Fraud - The prompt and reasonable reimbursements for community banks from the largest banks for fraudulently altered return checks, and the largest banks opening fraudulent accounts into which fraud items are being deposited, including - joint supervisory guidance addressed to the largest banks for their apparent management and compliance lapses, enhanced supervision, regulation and enforcement against the largest banks for CDD and CIP compliance - retaining the OCCs check fraud complaint email address (portal) - escalating complaints member resource - U.S. House member letter to the banking regulators, NCUA and FinCEN requesting briefing (House, OCC, Federal Reserve) Concerns expressed to the FDIC and OCC regarding the harmful impact of other agencys (i.e., CFPB and FHFA) rulemaking and policies on the banks these prudential regulators regulate for safety and soundness (FDIC and OCC)

CBAI Federal Policy Priorities - Bank Regulators Fulfilling Their Responsibilities Regarding Check Fraud Including Reimbursement for Fraudulently Altered Returned Checks Community banks continue to experience a growing problem of check fraud including reimbursements for fraudulently altered checks drawn on their customers accounts. The problem in the banking industry has been identified by our members as being enabled by the nations largest banks and credit unions, where fraudulent accounts are opened and fraudulent checks are deposited, which clear back to many community banks, harming them and their customers, in addition to undermining the publics confidence in the nations banking and financial system. CBAI urges the regulators to fulfill their responsibilities to address this problem by initiating Joint Supervisory Guidance and ramping up their examination and enforcement against the largest financial institutions to ensure they are held accountable for their apparent safety and soundness and compliance inadequacies. Agriculture and Rural America In the 119th Congress, CBAI strongly advocates for the passage of a multi-year Farm Bill that provides ample funding for commodity programs and rural broadband, maintains strong crop insurance products, approves higher USDA-guaranteed loan limits and expedited USDA Express program approvals, and prevents the expansion of the Farm Credit System into non-farm lending activities and opposes their exemption from the Section 1071 small business data reporting requirements. Community banks and their agricultural borrowers merit favorable tax treatment for interest income on ag loans secured by ag property and primary residences in ag communities. This will help sustain and strengthen ag lending by community banks and reduce interest expenses for their banks ag borrowers. Legitimate Bank Service Charges and Fees are Not Hidden, Exploitive and Junk Fees and Necessary Consumer Financial Responsibility There have been misguided characterizations that community bank service charges and fees are exploitive, unfair and even unlawful. What some have disparaging called Junk fees are bank fees and service charges that are justified, disclosed, and accepted by the consumers who utilize bank products and services. CBAI does not support practices that abuse consumers, but policymakers must accept the position that it is the consumers responsibility to maintain a positive deposit account balance and make their debt payments in a timely manner. It is wrong for policymakers to excuse irresponsible consumer financial behavior and doing so may encourage unacceptable behavior. Realistic Perspective on Financial Inclusion CBAI strongly supports financial inclusion and believes every responsible and able consumer and business should have a banking relationship with their local community bank. There is indisputable proof that the banking industry excels at serving the banking needs of American households. CBAI supports government initiatives that educate consumers and encourage financial inclusion, but it is not the role of federal, state or governments to provide banking services. Governments can assist the private sector in financial inclusion through incentives to promote community banks offering basic accounts and small-dollar consumer loans, especially to low- and middle-income consumers, which are those most likely to be unbanked or underbanked. Protecting Consumers by Restricting the Sale of Mortgage Trigger Leads Trigger leads are generated by credit reporting agencies that contact information about consumers applying for residential mortgage loans to mortgage marketers. This practice is permitted but restricted. Our members report that many of these marketing communications fall short of the legal requirements. Trigger leads compromise consumer privacy, create a flood of unwanted (even harassing) solicitations, create confusion and result in complaints. CBAI supports legislation that would restrict credit reporting agencies from selling consumer contact information unless the applicant has opted in to receive these solicitations. Governments Unnecessary Intrusion into Banking and Lending Which Displaces Community Banks SBA Direct Lending Community banks and the SBA have a long, beneficial and cooperative private sector/public sector relationship and the SBA has historically not competed with banks in lending to businesses. Community banks are far superior in prudently underwriting and administering commercial lending relationships. The SBA originating and disbursing 7(a) loans will result in credit underwriting lapses which will put billions of taxpayer dollars at risk of loss. CBAI urges policymakers to prohibit the SBA from making direct 7(a) loans or otherwise expanding the institutions beyond well-regulated banks that could originate SBA loans. Postal Banking CBAI believes postal banking is misguided and views any entry by the USPS into banking services as a significant and government-sponsored competitive threat to private-sector and tax-paying community banks. By better utilizing the vast network of community banks, which are already fully staffed by experienced and dedicated banking professionals, there is no need for the USPS to develop and offer banking services. Public Banking CBAI believes public banking is misguided and views any entry by federal, state or local governments into banking services as a significant and government-sponsored competitive threat to private-sector and tax-paying community banks. By better utilizing the vast network of community banks, which are already fully staffed by experienced and dedicated banking professionals, there is no need for the government to offer banking services. New Credit Card Routing Mandates Efforts to mandate credit card routing is ill conceived policymaking that will fail to benefit consumers by forcing a costly overhaul of the credit card payments landscape. The beneficiaries of the new mandates will be the largest merchants (not small businesses) which will not pass their savings on to consumers. CBAI supports greater competition and opposes concentrations in financial services represented by the too-big-to-fail banks and oligopolies like VISA and MasterCard, but misguided legislation is not the solution to the problems they create. Responsible Regulation of Digital Assets - Cryptocurrency, Central Bank Digital Currency (CBDC), Stablecoins and Decentralized Finance (DeFi) The risks posed by digital assets (cryptocurrency), central Bank digital currency (CBDC) and stablecoin, and decentralized finance (DeFi) are enormous, as well as the consequences for monetary policy, our financial system, and the banking industry. They pose threats to the privacy and security of consumers and small businesses. There is no single regulator responsible for this rapidly growing sector which combines elements of currency, payments and investments, and there is insufficient transparency and lack of accountability in this ecosystem. Policymakers must develop and implement a consistent federal regulatory framework that does not permit digital assets and DeFi to offer financial services or products without being subject to the same regulations as community banks and deny nonbank stablecoin issuers access to the Federal Reserve master account, both of which would threaten the essential and highly successful business model of responsible community banks. The Federal Home Loan Banks (FHLBs) in Their Comprehensive Review by the FHFA The FHLB System is an admirable public-private partnership where the FHLBs banks provide short-term liquidity, long-term funding, mortgage-related products, and other financial services to help their owner-members weather crisis and provide affordable credit to support the local communities. FHLBanks contributes a substantial portion of its income to affordable housing and community development in their respective districts. The Federal Housing Finance Agency (FHFA) has embarked on a comprehensive review of the FHLBs. CBAI recommends that the FHFA should not seek to disrupt the cooperative structure, regional nature, special functions, and the unique purposes of the FHLBanks. Reasonable Regulatory Rules and Implementation Small Business Data Collection A Final Rule was published in March of 2023. The Final Rule was flawed because it exempted too few financial institutions and set the revenue threshold so high that it now encompasses too many businesses, in addition to raising privacy and other concerns. There have been legal challenges to the Final Rule. CBAI supports the reasonable implementation of this reporting requirement and opposed efforts by Farm Credit to exempt its lenders. Customer Data Sharing A Final Rule was published in October of 2024. The Final Rule was flawed because it exempted too few financial institutions, ignores the costs of providing this service to consumers and does not adequately protect consumers and their community banks or compensate them from any losses related to data misuse, breaches and fraud. Modernizing the Community Reinvestment Act The Final Joint Rule was published in October of 2023. The Final Joint Rule was flawed because it exempted too few financial institutions and for many other reasons. There have been legal challenges to the Final Joint Rule. CBAI supports the reasonable implementation of the CRA that includes credit unions being subject to the CRA. Reporting Beneficial Ownership Information CBAI supports shifting the burden of collecting the BOI of community bank accountholders to the Financial Crimes Enforcement Network (FinCEN). The current requirement is flawed because it does not relieve community banks from this burden. There have been legal challenges to the reporting requirements. CBAI supports making FinCEN the sole repository of BOI and relieving community banks from this burden. Federal Safe Harbor for Banking Cannabis-Related Businesses Without taking a position on the legalization of cannabis, CBAI supports a federal safe harbor from sanctions for financial institutions that choose to serve legally compliant cannabis-related businesses (CRBs) and ancillary businesses that have commercial relationships with CBRs, in states where cannabis is legal. Allowing these businesses access to the traditional banking system and its services, versus operating exclusively in cash, is a public safety issue. Closing the Industrial Loan Company (ILC) Regulatory Loophole CBAI has consistently supported the long-standing American policy of prohibiting the mixing of banking and commerce, which ILCs represent, because of the risks they pose to the financial system, the FDICs DIF, our economy, consumers and American taxpayers. The risk posed by ILCs, particularly large technology and ecommerce giants, is a regulatory loophole that allows their holding companies to escape from consolidated federal supervision and regulation. This loophole must be closed. Appropriate Regulation of Fintechs and Innovations in Financial Services The pace of innovation in financial services has been accelerating. Many of these new services are offered by financial technology companies - better known as fintechs. Financial innovation presents community banks with challenges and opportunities. Policymakers should reasonably assist community banks to prepare for this new and evolving era, not pose unreasonable requirements on them, and not give fintechs any competitive advantages over community banks by subjecting them to lesser regulatory requirements. Prescriptive and Intrusive FDIC Corporate Governance Guidelines In 2023, the FDIC proposed new corporate governance and risk management guidelines. Although the guidelines only apply to covered institutions with $10 billion or more in assets, these overly prescriptive guidelines apply the same set of standards to larger community banks as they do to the nations largest banks. These guidelines would make it even more difficult to attract new directors, particularly those in rural areas. Harmful Climate Risk Regulations Community bankers high-contact and relationship-based lending model ensures that controls are in place to monitor climate risks on an ongoing basis. CBAI opposes any climate change regulations that will adversely impact community banks and their ability to support their customers and communities. Meaningful Regulatory Relief for Community Banks and Regulatory Overreach CBAI joins the ICBA in supporting a more efficient system of rules and regulations, unbiased laws governing the financial sector, a safer and more secure business environment, and more efficient agricultural policies to support the nations economic growth and development in all parts of the country. Many new and significant rules have been approved which individually and collectively present incredible challenges for community banks which are less likely to be able to comply with these many new requirements. CBAI urges carefully constructed legislation and regulation, robust congressional oversight of the regulators, and a moratorium on new rules until the impact of existing rules can be thoroughly assessed to minimize the damages to community banks. Credit Unions and Their Expanded Powers Credit unions have long since strayed from their founding purposes, weaponizing their competitive advantages, and are virtually indistinguishable from tax-paying community banks. Credit union acquisitions of community banks are increasing at an alarming pace and is an abuse of the tax code which exacerbates consolidation among financial institutions, negatively impacts all taxpayers, and reduces consumer choice. Credit union abuse of their tax exemption is an existential threat to community banks and the communities they serve and must end. Farm Credit System and its Expanded Powers The Farm Credit System (FCS) has long since strayed from its founding purpose, weaponizing its competitive advantages against community banks. The FCS is the only government sponsored entity (GSE) that competes directly with community banks. Its lenders leverage their tax and funding advantages as a GSE to steal away many of the best agriculture loans from community banks, which is contrary to their mission of serving young and beginning farmers and ranchers. This blatant and continued discrimination against community banks must end, the FCS competitive advantages must be reined in, and the playing field must be leveled for community banks. Enhanced Data, Cyber and Payment Card Security (Data Security) The need for data security is paramount in financial services. Community banks are strong guardians of the security and confidentiality of their customers information. Enhanced security standards should be enforced through a tiered system where the more restrictive rules are imposed on the largest members of the financial system and economy (bot community banks) where their lapses pose the greatest threat to the largest number of consumers. Consumer Financial Protection Bureau (CFPB) Reform and Exemptions for Community Banks CFPBs regulations must provide community banks with the flexibility to meet the needs of their customers - not a one-size-fits-all approach. They must not be burdened with additional and unnecessary regulatory requirements that would prevent them from serving their customers and communities. In reforming the CFPB, the single director governance should be replaced by a five-member board or commission. A broader definition of firms that grant credit should be subject to the CFPB rules, and they should be robustly supervised and examined. The focus of any enhanced regulation of financial products should be on the largest banks and financial firms, the unregulated shadow financial industry, and fintechs - not community banks. De Novo Community Bank Formation, the Dual Banking System, and Charter Choice The chartering of many newly chartered (de novo) community banks is vitally important to maintaining a strong, growing, evolving and vibrant profession in the face of continued banking industry consolidation. Hand in hand with renewed de novo bank formation is the importance of maintaining the dual banking system, where chartering and supervision are divided between the federal government and the states, and where the federal government supervision and regulation is divided between the Federal Reserve, Office of Comptroller of the Currency, and the Federal Deposit Insurance Corporation. Community banks should be able to choose the banking charter and associated prudential regulator that best fits their unique needs and business model. Sound Principles for Housing Government Sponsored Entity (GSE) Reform Reforms in government support for housing finance remain important to the future of the housing market and the U.S. economy. Unlike other private aggregators or investors, the GSEs have a mandate to serve all markets at all times, which is critical to maintaining liquidity particularly when markets are experiencing financial stress and private capital moves to the sidelines. Exiting receivership includes building capital to successfully operate within a broader housing finance framework, and bipartisan agreement on the proper role of the housing GSEs and the programs necessary to fulfill reasonable and consistent housing goals. Responsible Bank Merger Activity Some community banks have found it helpful to merge with other community banks to be able to spread the significant and escalating costs of regulatory compliance, cybersecurity, technology and innovation to remain highly competitive. Restrictive bank merger legislation or regulations should not apply to community banks. The Federal Reserves Role in Payments System Improvement (FedNow Service) The FedNow Service is a significant payments system improvement. The payments system must not be monopolized by The Clearing House and its large bank owners with their RTP Network. Community banks, consumers and small businesses must rely on the Federal Reserve to provide access to a safe and secure payments system, which requires the Fed to play a preeminent role in system improvements. The FedNow Service should have robust capabilities, should be interoperable with other payments systems and should only be accessed by regulated financial institutions - not Amazon, Walmart, and the many fintechs that are seeking direct access to the payment rails. Finally Address the Risks of Too-Big-To-Fail (and now Too-Big-To-Not-Insure) Banks and Financial Firms, to Protect Community Banks, our Financial System, the Economy, and American Taxpayers from Future Bailouts Too-Big-To-Not-Insure The 2023 failures of Silicon Valley Bank and Signature Bank revealed that policymakers have created a new category of very large banks - Too-Big-To-Not-Insure (although they will fail) because the FDIC decided to insure 100% of the uninsured deposits of these two failed banks. There must be accountability by both the banks and the regulators for their respective failures. In the future, if systemically important financial institutions (SIFIs) cause losses to the DIF then SIFIs should be responsible for reimbursing the DIF for all the losses they created. Too-Big-To-Fail The Great Financial Crisis, and the mini crisis caused by the failures of SVB and SBNY, were caused by the misconduct of the nations largest banks and financial firms and by banking regulators that did not ensure the safety and soundness of these financial behemoths. The megabanks and financial firms have proven, at great cost to American taxpayers, that they cannot be managed, supervised, disciplined or prosecuted. They are clearly too-big-to-change, too-big-to-fail, and must be downsized. This necessary policy objective can be accomplished by separating the traditional deposit-taking and lending activities of the largest banks from their speculative investment banking, securities underwriting, and market making activities. The time to act is now before the next financial crisis. (House and Senate, OCC, FDIC) Legislation and Regulation - H.R. 10045 (All Sections) to provide emergency assistance to producers of eligible commodities for which the expected revenue on crop year 2024 is below projections (House) H.R. 3139 or the ACRE Act (All Sections) to provide that interest income on loans to ag borrowers secured by ag assets or residences in ag areas will be considered exempt for income tax purposes (House) S. 3502 or the Homebuyers Privacy Protection Act (Senate) (All Sections) and H.R. 7297 (House) (All Sections) are bills to prohibit credit reporting agencies from providing a credit report not initiated by a consumer if the report is being provided on the basis that the consumer has had a credit inquiry regarding a home mortgage loan. This practice, known as producing a trigger lead, provides notice to other mortgage lenders that the consumer is seeking a mortgage loan (Senate and House) S. 1838 or the Credit Card Competition Act (All Sections) to provide competition into the routing of credit card transactions (Senate) Letters - Comment Letter to the FDIC regarding Industrial Loan Companies (ILCs): NPR - Parent Companies of Industrial Banks and Industrial Loan Companies; RIN 3064-AF88 (FDIC) Comment Letter to the OCC, FDIC and the Federal Reserve regarding the EGRPRA Review concerning tiered regulations, consumer protections, directors/officers/employees, money laundering/BSA/AML, FinCEN and BOI reporting, and check fraud and reimbursements for community banks (OCC, FDIC, Federal Reserve) Comment Letter to the FDIC regarding brokered Deposits: NPR - Unsafe and Unsound Banking Practices; Brokered Deposit Restrictions - RIN 3064-AF99 (FDIC) Comment Letter to the Federal Reserve regarding Discount Window Borrowings: RFI - Operational Aspects of Federal Reserve Bank Extensions of thew Discount Window and Intraday Credit - Docket No. OP-1838 (Federal Reserve) Action Alerts - None Miscellaneous - Complaint to the Farm Credit Administrations Office of Inspector General regarding alleged illegal residential mortgage loan made by an FCS lender in a town which has a population in excess of 10,000 people which would be in violation of FCSs residential mortgage lending authority (Farm Credit) Concerns expressed to the Federal Housing Finance Agency regarding their Advisory Bulletin that focuses on credit risk management expectations for FHLBs (FHFA) Deposit Check Fraud - The prompt and reasonable reimbursements for community banks from the largest banks for fraudulently altered return checks, and the largest banks opening fraudulent accounts into which fraud items are being deposited, including - joint supervisory guidance addressed to the largest banks for their apparent management and compliance lapses, enhanced supervision, regulation and enforcement against the largest banks for CDD and CIP compliance - retaining the OCCs check fraud complaint email address (portal) - escalating complaints member resource - U.S. House member letter to the banking regulators, NCUA and FinCEN requesting briefing (House, OCC, Federal Reserve) Concerns expressed to the FDIC and OCC regarding the harmful impact of other agencys (i.e., CFPB and FHFA) rulemaking and policies on the banks these prudential regulators regulate for safety and soundness (FDIC and OCC)