ACRE Act of 2023

H.R. 1996 SAFE Banking Act (2021-2022); S.2860 SAFER Banking Act (2023) federal legislation to permit providing banking services to legitimate cannabis businesses. H.R. 3139 - ACRE Act of 2023 Agricultural banking issues; Section 1071 Dodd Frank Wall Street Reform and Consumer Protection Act, requiring gathering and reporting of demographic information by lenders; Corporate Transparency Act regulatory proposal addressing beneficial ownership reporting requirements; FHFA November, 2023 Report on the Federal Home Loan Bank System; Federal Tax Exemption for Credit Unions; Credit Card Competition Act, S.1838/HR3881

Client expense: $45,000 · Firm income: Not reported

Government targets: Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA), Federal Reserve System, HOUSE OF REPRESENTATIVES, Housing & Urban Development, Dept of (HUD), Internal Revenue Service (IRS), Labor, Dept of (DOL), Office of the Comptroller of the Currency (OCC), SENATE, Securities & Exchange Commission (SEC), Small Business Administration (SBA)

Ag Appropriations FY25 Export Finance Broadband Rural Development Rural Business Investment Program Inflation Reduction Act Implementation 2024 Farm Bill Reauthorization Investing in Rural Communities Act (H.R. 4736) Fishing Industry Credit Enhancement Act (S.1756/H.R.4940) ReConnecting Rural America Act (S. 1642) Supporting Rural Cooperatives and Communities Act (H.R. 6661) Rural Partnership and Prosperity Act (S. 3309) Producer and Agricultural Credit Enhancement (PACE) Act (S. 2890/H.R. 5631) Farm Credit Administration Independent Authority Act (H.R. 2423) FARM Home Loans Act of 2023 (S.3497) Expanding Agricultural Exports Act of 2023 (S. 176/H.R.648) Access to Credit for our Rural Economy Act of 2023 (S.2371/H.R.3139) Farmer Assistance and Revenue Mitigation Act of 2024 (H.R.10045)

Client expense: $320,000 · Firm income: Not reported

Government targets: Agriculture, Dept of (USDA), Farm Credit Administration, HOUSE OF REPRESENTATIVES, SENATE

Section 199A deduction Access to Credit for our Rural Economy Act of 2023 (S.2371/H.R.3139)

Client expense: $320,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

Farm Credit System H.R.3139 & S.2371, Access to Credit for our Rural Economy (ACRE) Act of 2023 H.R.8467, Farm, Food, and National Security Act of 2024

Client expense: $1,570,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

Issues pertaining to farm finances and H.R. 3139, S.2371 ACRE Act.

Client expense: Not reported · Firm income: $50,000

Government targets: HOUSE OF REPRESENTATIVES, SENATE

FARM BILL: - Asked House and Senate Members to support S.5335, the Rural Prosperity and Food Security Act of 2024 and H.R.8467, the Farm, Food, and National Security Act otherwise known as farm bill. - Asked PFB members to complete AFBF's advocacy email asking for their legislator to pass a farm bill ASAP and include a legislative fix to Prop 12. - Worked with AFBF on securing votes for farm bill by communicating how conversations went during meetings with legislators and/or staff. - Met with PA delegation's offices to discuss farm bill and a legislative fix to Prop 12. Discussed need to be passed on time and Farm Bureau priorities. Listened to legislators' concerns with farm bill as well as their individual priorities for the legislation. See Section 24 - Trade - of this report for information on lobbying efforts for Prop 12. ASKED TO SUPPORT THE FOLLOWING: - S.5321, the Farm Ownership Improvement Act, which would require USDA to implement a pre-qualification or pre-approval process for all farmers and ranchers seeking FSA Direct Farm Ownership loans. - S.4168/H.R.4838, the Specialty Crop Security Act, which would increase USDA's Specialty Crop Block Grant (SCBG) program authorization from $85 to $100 million per year and expand opportunities for specialty crop stakeholders to provide input into how program funding is used by state departments of agriculture. - S.1014/H.R.1756, the Dairy Pricing Opportunity Act, which would mandate cost and yield surveying of processors to participate in the NDPSR survey every two years. - S.980/H.R.3755, the Industrial Hemp Act, which would exempt farmers exclusively growing industrial hemp from the burdensome background checks and costly sampling and testing protocols required for farmers growing cannabinoid hemp like that used in the extraction of CBD. - S.1867/H.R.3922, the Expanding Childcare in Rural America Act, which would direct USDA to authorize and prioritize projects that address the availability, quality, and cost of childcare in agricultural and rural communities. - S.1837/H.R.3867, the Spotted Lanternfly Research and Development Act, which would designate spotted lanternflies as a high priority pest under the National Institute of Food and Agriculture to direct more federal research dollars to combat these devastating insects. - S.1816/H.R.3815, the Protecting Mushroom Farmers Act, which would require a USDA study on providing crop insurance for mushroom farmers. - S.2458/H.R.3904, the Crop Insurance for Future Farmers Act, which would help our next generation of farmers by aligning the definition of Beginning Farmers to match that of other USDA programs - 10 crop years or less instead of the status quo of 5 crop years or less. - S.1400/H.R.3036, the Increased TSP Access Act, which would help streamline the technical service provider (TSP) certification at NRCS and leverage the programs and technical expertise of NRCS to make conservation programs available to more farmers and on more land. - S.2614/H.R.8488, the Farmer to Farmer Education Act, which would allow farmer-to-farmer groups to develop cooperative agreements with USDA to share conservation concepts and new practices. - H.R.4856, the GusNIP Expansion Act, which would enhance and expand the Gus Schumacher Nutrition Incentive Program (GusNIP), which awards competitive grant funding to nonprofit organizations and government agencies for projects that provide incentives to income-eligible consumers to increase their purchase of fruits and vegetables. ASKED TO OPPOSE THE FOLLOWING: - S.658/H.R.5252, the EQIP Improvement Act, which would create severe consequences to the EQIP program for animal agriculture operations by targeting livestock operations conservation project funding. NEUTRAL/MONITORED BUT NOT LOBBIED BILLS: - S.2371/H.R.3139, the ACRE Act, which would exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate. - S.5101, the Farmer Driven Conservation Outcomes Act, which would authorize USDA to measure, assess, and report on the outcomes associated with its conservation programs. - S.4219/H.R.8210, the Future Farmers and Ranchers of Tomorrow Act, which would revise USDAs qualified beginning farmer or rancher definition to allow non-related beginning farmers and ranchers in joint entities to be eligible for FSA loans. - S.1842/H.R.6687, the Innovative Feed Enhancement and Economic Development (FEED) Act, which would would amend the Federal Food, Drug and Cosmetic Act to establish a new category of animal food additives. - S.2631/H.R.3424, the Forest Conservation Easement Program (FCEP) Act, which would prevent the conversion of forests into non-forest areas by authorizing funding to purchase development rights from willing private landowners. - H.R.1624, the Puppy Protection Act, which would require USDA to expand standards that govern the humane handling, care, treatment, and transportation of animals to include new requirements for commercial dog dealers. OTHER: - Reviewed FWS' proposal to list the Monarch Butterfly as an endangered species (Docket #: FWS-R3-ES-2024-0137-0001). Expressed concerns to legislators over the impact this will have on agriculture. Worked with PFB members to comply information for comments. - Sent election congrats letters to PA House and Senate Members and started the conversation of 119th Congressional priorities. - Reviewed the following rulemakings from USDA and shared AFBF's comments with PA's delegation for: Fair and Competitive Livestock and Poultry Markets (Docket #: AMS-FTPP-21-0046); Poultry Grower Payment Systems and Capital Improvement Systems (Docket #: AMS-FTPP-22-0046); Transparency in Poultry Grower Contracting and Tournaments (Docket #: AMS-FTPP-21-0044); and Inclusive Competition and Market Integrity under the Packers and Stockyards Act (Docket #: AMS-FTPP-21-0045). - Advocacy work on the Federal Milk Marketing Orders (FMMOs). Reviewed USDA's proposed final decision for the FMMOs (Docket #: AMS-DA-23-0031) and emailed PA House and Senate Members with PFB's position to not take a stand to allow for a fair referendum process. Specifically, supported a switchback either by USDA or Congress for the higher of in Class I milk. Additionally, asked Congress Members to support requiring mandatory audited surveying for make allowance changes in the FMMOs. - Advocacy work on increasing the availability and affordability of rural childcare. - Reviewed Chevron Deference case to determine the impact it will have on ag. Supported SCOTUS' decision. Signed onto coalition letter to President Biden to urge suspension of regulatory activity until they review the Loper decision.

Client expense: $10,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, President of the U.S., 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)

Client expense: $65,000 · Firm income: Not reported

Government targets: Farm Credit Administration, Federal Deposit Insurance Corporation (FDIC), Federal Reserve System, HOUSE OF REPRESENTATIVES, Office of the Comptroller of the Currency (OCC), 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. 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)

Client expense: $65,000 · Firm income: Not reported

Government targets: Farm Credit Administration, Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA), Federal Reserve System, HOUSE OF REPRESENTATIVES, Office of the Comptroller of the Currency (OCC), 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. 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. 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. 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. 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) 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 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 - 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)

Client expense: $65,000 · Firm income: Not reported

Government targets: Federal Deposit Insurance Corporation (FDIC), Federal Reserve System, HOUSE OF REPRESENTATIVES, Office of the Comptroller of the Currency (OCC), 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. 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)

Client expense: $65,000 · Firm income: Not reported

Government targets: Farm Credit Administration, Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA), Federal Reserve System, HOUSE OF REPRESENTATIVES, Office of the Comptroller of the Currency (OCC), 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. 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 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 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. 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. 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. 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. 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) 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 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)

Client expense: $65,000 · Firm income: Not reported

Government targets: Farm Credit Administration, Federal Deposit Insurance Corporation (FDIC), Federal Reserve System, HOUSE OF REPRESENTATIVES, Office of the Comptroller of the Currency (OCC), SENATE

CBAI Federal Policy Priorities - 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. 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 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. 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. 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, FDIC, OCC) 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) Letters - None Action Alerts - None Miscellaneous - None

Client expense: $65,000 · Firm income: Not reported

Government targets: Federal Deposit Insurance Corporation (FDIC), HOUSE OF REPRESENTATIVES, Office of the Comptroller of the Currency (OCC), SENATE

H.R. 3139 ACRE Act H.R. 4055 The Opportunity Zones Enhancement Act of 2023 H.R. 4721 Main Street Tax Certainty Act S. 1706 Main Street Tax Certainty Act S. 2371 ACRE Act

Client expense: $736,305 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

H.R. 1392 NFIP Extension Act H.R. 3139 ACRE H.R. 7297 Homebuyers Privacy Protection Act H.R. 8099 Credit Report Enhancement Directive Act S. 2142 NFIP Reauthorization and Reform Act S. 2371 ACRE S. 2968 A bill to reauthorize the National Flood Insurance Program. S. 3502 Homebuyers Privacy Protection Act S. 3902 Appraisal Industry Improvement Act S. 4638 National Defense Authorization Act for Fiscal Year 2025 Senate Amendment 2358 to National Defense Authorization Act (Trigger Leads) Senate Amendment 3290 National Defense Authorization Act (Trigger leads) Capital Requirements and FHLB Advances Credit Score Models implementation FHFA FHLB System Review FHLB Reform GSEs: Reform, Recapitalization, PSPA Amendments, Climate Change Housing Finance Reform National Flood Insurance Reauthorization TILA-RESPA Integrated Disclosures Trigger Leads

Client expense: $736,305 · Firm income: Not reported

Government targets: Federal Housing Finance Agency (FHFA), HOUSE OF REPRESENTATIVES, SENATE

H.R. 2423 The Farm Credit Administration Independent Authority Act H.R. 3139 ACRE Act H.R. 3787 Modernizing Agricultural and Manufacturing Bonds Act H.R. 4673 Financial Innovation and Technology for the 21st Century Act H.R. 4736 The Investing in Rural America Act H.R. 4940 The Fishing Industry Credit Enhancement Act H.R. 5631 The Producer and Agricultural Credit Enhancement Act of 2023 H.R. 5877 USDA Express Loan Act H.R. 6564 The Farm Credit Adjustment Act H.R. 7338 Rural Credit Access Act H.R. 8467 The Farm, Food, and National Security Act of 2024 - Farm Credit 1071 Exemption S. 1756 The Fishing Industry Credit Enhancement Act S. 2252 Promoting New and Diverse Depositories Act S. 2371 ACRE Act S. 2723 Modernizing Agricultural and Manufacturing Bonds Act S. 2890 Producer and Agricultural Credit Enhancement Act of 2023 S. 3497 The FARM Home Loans Act 2023 Farm Bill Reauthorization Adequate Farm Bill Spending Crop Insurance Cryptocurrency Regulation Digital Assets Regulation Durbin Amendment on Debit Card Routing; Extension to Credit Cards Farm Credit System Expansion Guaranteed Farm Loans Sec. 1071 of the Dodd Frank Act

Client expense: $736,305 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

HR 541: Beginning Agriculturist Lifetime Employment Act of 2023 (BALE Act of 2023) Agriculture Inclusiveness Agriculture Appropriations H.R. 4736 Investing in Rural America Act HR 3139/S2371, ACRE Act Climate/Food and Agriculture Climate Alliance (FACA) Farm Bill Renewable Energy Rural Business Investment Company (RBIC) Program Legislation S. 1756 / HR 4940 Fishing Industry Credit Enhancement Act Crop Insurance Rural Housing Issues Agriculture Exports S. 2890 / HR 5631 Producer and Agricultural Credit Enhancement Act HR 3904/S.2458 Crop Insurance for Future Farmers Act NASS Modernization Legislation HR 5877, USDA Express Loan Program Act HR 8467, The Farm, Food and National Security Act of 2024 S.3497, FARM Home Loans Act HR 6564, Farm Credit Adjustment Act Farmer Mac S.1237/H.R. 1250 - Family Farm and Small Business Exemption Act

Client expense: $110,000 · Firm income: Not reported

Government targets: Agriculture, Dept of (USDA), Farm Credit Administration, HOUSE OF REPRESENTATIVES, SENATE

Farm Credit System H.R.3139 & S.2371, Access to Credit for our Rural Economy (ACRE) Act of 2023 H.R.8467, Farm, Food, and National Security Act of 2024

Client expense: $1,760,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

Issues pertaining to farm finances and H.R. 3139, S.2371 ACRE Act.

Client expense: Not reported · Firm income: $50,000

Government targets: HOUSE OF REPRESENTATIVES, SENATE

H.R. 1996 SAFE Banking Act (2021-2022); S.2860 SAFER Banking Act (2023) federal legislation to permit providing banking services to legitimate cannabis businesses. H.R. 3139 - ACRE Act of 2023 Agricultural banking issues; Section 1071 Dodd Frank Wall Street Reform and Consumer Protection Act, requiring gathering and reporting of demographic information by lenders; Corporate Transparency Act regulatory proposal addressing beneficial ownership reporting requirements; FHFA November, 2023 Report on the Federal Home Loan Bank System; Federal Tax Exemption for Credit Unions; Credit Card Competition Act, S.1838/HR3881

Client expense: $40,000 · Firm income: Not reported

Government targets: Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA), Federal Reserve System, HOUSE OF REPRESENTATIVES, Housing & Urban Development, Dept of (HUD), Internal Revenue Service (IRS), Labor, Dept of (DOL), Office of the Comptroller of the Currency (OCC), SENATE, Securities & Exchange Commission (SEC), Small Business Administration (SBA)

FARM BILL: - Asked House Members to support H.R.8467, the Farm, Food, and National Security Act otherwise known as farm bill. - Encouraged Senate Members to ask Chairwoman Stabenow to release text. - Listened to Chairwoman Stabenow and Ranking Member Boozman speak at an AFBF conference on the status of farm bill in the Senate and the strategy moving forward. - Addressed concerns over Title IV - Nutrition - of H.R. 8467 otherwise known as farm bill. - Asked PFB members to complete AFBF's advocacy email asking for their legislator to pass a farm bill ASAP and include a legislative fix to Prop 12. - Worked with AFBF on securing votes for farm bill by communicating how conversations went during meetings with legislators and/or staff. - Met with PA delegation's offices to discuss farm bill and a legislative fix to Prop 12. Discussed need to be passed on time and Farm Bureau priorities. Listened to legislators' concerns with farm bill as well as their individual priorities for the legislation. See Section 24 - Trade - of this report for information on lobbying efforts for Prop 12. - Signed onto coalition letter supporting farm bill in August. - Asked PA House Republican delegation to sign onto Dear Colleague letter to House Leadership asking them to bring farm bill to the floor. ASKED TO SUPPORT THE FOLLOWING: - No bill # yet, the Farm Ownership Improvement Act, which would require USDA to implement a pre-qualification or pre-approval process for all farmers and ranchers seeking FSA Direct Farm Ownership loans. - S.4168/H.R.4838, the Specialty Crop Security Act, which would increase USDA's Specialty Crop Block Grant (SCBG) program authorization from $85 to $100 million per year and expand opportunities for specialty crop stakeholders to provide input into how program funding is used by state departments of agriculture. - S.1014/H.R.1756, the Dairy Pricing Opportunity Act, which would mandate cost and yield surveying of processors to participate in the NDPSR survey every two years. - S.980/H.R.3755, the Industrial Hemp Act, which would exempt farmers exclusively growing industrial hemp from the burdensome background checks and costly sampling and testing protocols required for farmers growing cannabinoid hemp like that used in the extraction of CBD. - S.1867/H.R.3922, the Expanding Childcare in Rural America Act, which would direct USDA to authorize and prioritize projects that address the availability, quality, and cost of childcare in agricultural and rural communities. - S.1837/H.R.3867, the Spotted Lanternfly Research and Development Act, which would designate spotted lanternflies as a high priority pest under the National Institute of Food and Agriculture to direct more federal research dollars to combat these devastating insects. - S.1816/H.R.3815, the Protecting Mushroom Farmers Act, which would require a USDA study on providing crop insurance for mushroom farmers. - S.2458/H.R.3904, the Crop Insurance for Future Farmers Act, which would help our next generation of farmers by aligning the definition of Beginning Farmers to match that of other USDA programs - 10 crop years or less instead of the status quo of 5 crop years or less. - S.1400/H.R.3036, the Increased TSP Access Act, which would help streamline the technical service provider (TSP) certification at NRCS and leverage the programs and technical expertise of NRCS to make conservation programs available to more farmers and on more land. - S.2614/H.R.8488, the Farmer to Farmer Education Act, which would allow farmer-to-farmer groups to develop cooperative agreements with USDA to share conservation concepts and new practices. - H.R.4856, the GusNIP Expansion Act, which would enhance and expand the Gus Schumacher Nutrition Incentive Program (GusNIP), which awards competitive grant funding to nonprofit organizations and government agencies for projects that provide incentives to income-eligible consumers to increase their purchase of fruits and vegetables. ASKED TO OPPOSE THE FOLLOWING: - S.658/H.R.5252, the EQIP Improvement Act, which would create severe consequences to the EQIP program for animal agriculture operations by targeting livestock operations conservation project funding. NEUTRAL/MONITORED BUT NOT LOBBIED BILLS: - S.2371/H.R.3139, the ACRE Act, which would exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate. - S.5101, the Farmer Driven Conservation Outcomes Act, which would authorize USDA to measure, assess, and report on the outcomes associated with its conservation programs. - S.4219/H.R.8210, the Future Farmers and Ranchers of Tomorrow Act, which would revise USDAs qualified beginning farmer or rancher definition to allow non-related beginning farmers and ranchers in joint entities to be eligible for FSA loans. - S.1842/H.R.6687, the Innovative Feed Enhancement and Economic Development (FEED) Act, which would would amend the Federal Food, Drug and Cosmetic Act to establish a new category of animal food additives. - S.2631/H.R.3424, the Forest Conservation Easement Program (FCEP) Act, which would prevent the conversion of forests into non-forest areas by authorizing funding to purchase development rights from willing private landowners. - H.R.1624, the Puppy Protection Act, which would require USDA to expand standards that govern the humane handling, care, treatment, and transportation of animals to include new requirements for commercial dog dealers. OTHER: - Reviewed the following rulemakings from USDA: Fair and Competitive Livestock and Poultry Markets (Docket #: AMS-FTPP-21-0046); Poultry Grower Payment Systems and Capital Improvement Systems (Docket #: AMS-FTPP-22-0046); Transparency in Poultry Grower Contracting and Tournaments (Docket #: AMS-FTPP-21-0044); and Inclusive Competition and Market Integrity under the Packers and Stockyards Act (Docket #: AMS-FTPP-21-0045). - Advocacy work on the Federal Milk Marketing Orders (FMMOs). Reviewed USDA's Recommended Decision for the FMMOs (Docket #: AMS-DA-23-0031). Specifically, supported a switchback either by USDA or Congress for the higher of in Class I milk. Additionally, asked Congress Members to support requiring mandatory audited surveying for make allowance changes in the FMMOs. - Reviewed Chevron Deference case to determine the impact it will have on ag. Supported SCOTUS' decision. Signed onto coalition letter to President Biden to urge suspension of regulatory activity until they review the Loper decision. - Emailed Meuser's office that PFB supports Land O Lakes conservation project. - Reviewed Secretary Vilsack's response letter to Rep. Deluzio's meat processing consolidation letter as a result of a roundtable with Beaver/Lawrence County FB.

Client expense: $10,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, President of the U.S., SENATE

HR 541: Beginning Agriculturist Lifetime Employment Act of 2023 (BALE Act of 2023) Agriculture Inclusiveness Agriculture Appropriations H.R. 4736 Investing in Rural America Act HR 3139/S2371, ACRE Act Climate/Food and Agriculture Climate Alliance (FACA) Farm Bill Renewable Energy Rural Business Investment Company (RBIC) Program Legislation S. 1756 / HR 4940 Fishing Industry Credit Enhancement Act Crop Insurance Foreign Ownership Rural Housing Issues Agriculture Exports S. 2890 / HR 5631 Producer and Agricultural Credit Enhancement Act HR 3904/S.2458 Crop Insurance for Future Farmers Act NASS Modernization Legislation HR 5877, USDA Express Loan Program Act HR 8467, The Farm, Food and National Security Act of 2024 S.3497, FARM Home Loans Act HR 6564, Farm Credit Adjustment Act Farmer Mac

Client expense: $90,000 · Firm income: Not reported

Government targets: Agriculture, Dept of (USDA), Farm Credit Administration, HOUSE OF REPRESENTATIVES, SENATE

H.R. 1996 SAFE Banking Act (2021-2022); S.2860 SAFER Banking Act (2023) federal legislation to permit providing banking services to legitimate cannabis businesses. H.R. 3139 - ACRE Act of 2023 Agricultural banking issues; Section 1071 Dodd Frank Wall Street Reform and Consumer Protection Act, requiring gathering and reporting of demographic information by lenders; Corporate Transparency Act regulatory proposal addressing beneficial ownership reporting requirements; FHFA November, 2023 Report on the Federal Home Loan Bank System; Federal Tax Exemption for Credit Unions; Credit Card Competition Act, S.1838/HR3881

Client expense: $50,000 · Firm income: Not reported

Government targets: Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA), Federal Reserve System, HOUSE OF REPRESENTATIVES, Housing & Urban Development, Dept of (HUD), Internal Revenue Service (IRS), Labor, Dept of (DOL), Office of the Comptroller of the Currency (OCC), SENATE, Securities & Exchange Commission (SEC), Small Business Administration (SBA)

Issues pertaining to farm finances and H.R. 3139, S.2371 ACRE Act.

Client expense: Not reported · Firm income: $50,000

Government targets: HOUSE OF REPRESENTATIVES, SENATE

Farm Credit System H.R.3139 & S.2371, Access to Credit for our Rural Economy (ACRE) Act of 2023 H.R.8467, 2024 Farm Bill

Client expense: $1,490,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

H.R. 3139, ACRE Act of 2023, provisions related to agricultural real estate financing.

Client expense: $200,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

H.R. 3139 ACRE Act H.R. 3335 The IRS eIVES Modernization and Anti-Fraud Act of 2023) H.R. 4055 The Opportunity Zones Enhancement Act of 2023 H.R. 4721 Main Street Tax Certainty Act S. 1706 Main Street Tax Certainty Act S. 2371 ACRE Act

Client expense: $705,730 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

H.R. 1392 NFIP Extension Act H.R. 3139 ACRE H.R. 7297 Homebuyers Privacy Protection Act H.R. 8099 Credit Report Enhancement Directive Act S. 2142 NFIP Reauthorization and Reform Act S. 2371 ACRE S. 2968 A bill to reauthorize the National Flood Insurance Program. S. 3502 Homebuyers Privacy Protection Act S. 3902 Appraisal Industry Improvement Act Capital Requirements and FHLB Advances Credit Score Models implementation FHFA FHLB System Review FHLB Reform GSEs: Reform, Recapitalization, PSPA Amendments, Climate Change Housing Finance Reform National Flood Insurance Reauthorization TILA-RESPA Integrated Disclosures Trigger Leads

Client expense: $705,730 · Firm income: Not reported

Government targets: Federal Housing Finance Agency (FHFA), HOUSE OF REPRESENTATIVES, SENATE

H.R. 2423 The Farm Credit Administration Independent Authority Act H.R. 3139 ACRE Act H.R. 3787 Modernizing Agricultural and Manufacturing Bonds Act H.R. 4673 Financial Innovation and Technology for the 21st Century Act H.R. 4736 The Investing in Rural America Act H.R. 4940 The Fishing Industry Credit Enhancement Act H.R. 5631 The Producer and Agricultural Credit Enhancement Act of 2023 H.R. 5877 USDA Express Loan Act H.R. 6564 The Farm Credit Adjustment Act H.R. 7338 Rural Credit Access Act H.R. 8467 The Farm, Food, and National Security Act of 2024 - Farm Credit 1071 Exemption S. 1756 The Fishing Industry Credit Enhancement Act S. 2252 Promoting New and Diverse Depositories Act S. 2371 ACRE Act S. 2723 Modernizing Agricultural and Manufacturing Bonds Act S. 2890 Producer and Agricultural Credit Enhancement Act of 2023 S. 3497 The FARM Home Loans Act 2023 Farm Bill Reauthorization Adequate Farm Bill Spending Crop Insurance Cryptocurrency Regulation Digital Assets Regulation Durbin Amendment on Debit Card Routing; Extension to Credit Cards Farm Credit System Expansion Guaranteed Farm Loans Sec. 1071 of the Dodd Frank Act

Client expense: $705,730 · Firm income: Not reported

Government targets: Agriculture, Dept of (USDA), HOUSE OF REPRESENTATIVES, SENATE

CBAI Federal Policy Priorities - The Community Bankers Association of Illinois (CBAI) supports fair competition for financial services, tiered regulations, the separation of banking and commerce, the dual banking system/charter choice, and financial innovation; and opposes discrimination favoring certain financial service providers, banking industry consolidation, and systemic risk. Based on these guiding principles, CBAI has identified the following 2023 Federal Legislative and Regulatory Policy Priorities, which if implemented, will help community banks thrive and better serve their customers and communities. Traditional Issues, Opportunities and Concerns Additional Meaningful Regulatory Relief for Community Banks The importance of community banks cannot be overstated, and they serve their customers and communities honestly and with respect. 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. Community Bank Position on Credit Unions and Their Expanded Powers Credit unions have long since strayed from their founding purpose of serving individuals of modest means and with a common bond. They blatantly abuse their competitive advantages and are virtually indistinguishable from tax-paying community banks. Credit union acquisitions of community banks is a recent and disturbing trend that negatively impacts all taxpayers. An exit fee should be imposed on these acquisitions. This escalation of credit unions abusing of their tax-exemption should prompt Congress to act now. This abuse is an existential threat to community banks and the communities they serve. Community Bank Position on the Farm Credit System and its Expanded Powers The Farm Credit System (FCS) has long since strayed from its founding purposes, blatantly abusing its competitive advantages against community banks. The FCS is the only GSE that competes directly with community banks. This blatant and continuing discrimination against community banks must end and FCS competitive advantages must be reined-in, and the playing field leveled for community banks. Enhanced Data, Cyber and Payment Card Security (Data Security) Enhanced security standards should be enforced through a tiered system where the more restrictive rules and are imposed on the largest and most critical members of the financial system and economy where their lapses pose the greatest threat to the largest number of consumers. Core data security principals in standards enacted by legislation and regulations must include the complete cost of data breaches being borne by that party that caused the breach; all participants should be subject to verifiable Gramm-Leach-Bliley Act-like data security standards; and any new data security standard proposals should ensure that community banks are not overburdened with redundant standards. Consumer Financial Protection Bureau (CFPB) Reform and Meaningful Exemptions for Community Banks Regulations promulgated by the CFPB must provide community banks with the flexibility to meet the needs of its customers and they must not be burdened with additional and unnecessary regulatory requirements that would prevent them from serving their customers and communities. A one-size-fits-all approach to CFPB regulations harms the successful community bank business model. 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, these firm should be robustly supervised and examined; and the focus of any enhanced regulation of financial products should be on the mega banks and financial firms, the unregulated shadow financial industry and emerging Fintech companies. The CFPB has the statutory authority under the Dodd-Frank Act to exempt any class of providers [community banks] or any products or services from the rules it writes, but to-date the Bureau has been far too reticent to do so. The effective use of this authority will ensure community banks continue to be a healthy alternative to large banks and non-banks for consumers seeking to use responsible financial service providers. De Novo Community Bank Formation, the Dual Banking System and Charter Choice Newly chartered (de novo) community banks are vitally important to maintaining a strong, growing, evolving and vibrant profession in the face of banking industry consolidation. Many new banks must be chartered each year to help maintain the vitality of the community banking profession. The dual banking system, where chartering and supervision is divided between the federal government and the states, is important and must be maintained. Community banks should be able to choose the banking charter that best fits their unique business model. A banking system with multi-agency (state and federal) regulators and charter choice provides the necessary checks and balances as well as improved rulemaking on complex issues. Sound Principles for Housing Government Sponsored Entity (GSE) Reform The seemingly endless and ongoing period of government ownership and control of Fannie and Freddie must come to an end. GSE reform remains critically important to the future of the housing market and the U.S. economy. Community banks depend on the GSE for direct access to the secondary market. The GSEs must provide a steady and reliable source of funding for home mortgage lending for lenders of all sizes and through all economic cycles. This is particularly critical to maintaining liquidity when the markets are experiencing financial stress. Financial Transaction Tax Tax laws should encourage and promote robust economic activity and a thriving community banking sector, not impose new bank-specific fees, punitive new levies, transaction taxes, limitations on the deductibility of expenses, revenue offsets or pay-fors that target the banking industry. Rather, there should be parity among all financial service providers; there should be tax incentives for community banks serving low- and moderate-income individuals, small businesses, and small farms; and there should be a tax credit equivalent to the cost of community bank compliance with BSA compliance. Responsible Bank Merger Activity New bank merger legislation or regulation should not apply to community banks. Rather, policymakers should seriously consider the impact on our financial system, economy, and American taxpayers by allowing the nations mega banks, which are too big and unable to fail, to become even larger and more interconnected. Current Issues, Opportunities and Concerns Bank Regulators Involvement in Resolving Reimbursement for Fraudulently Altered Returned Checks CBAIs member community banks have been experiencing a pernicious and growing problem with reimbursements for fraudulently altered checks drawn on their customers accounts. The problem can be accurately summarized as being caused by the nations largest banks and credit union, where these checks were deposited in fraudulent accounts, which is harming community banks and their customers, in addition to undermining the publics confidence in the nations banking and financial system. CBAI has urged the regulators to get involved and address this problem. Finally Address the Risks of Too-Big-To-Fail (and now Too-Big-To-Not-Completely-Insure) Banks and Financial Firms to Protect Our Financial System, the Economy, and American Taxpayers from Future Bailouts TBTF The financial crisis, taxpayer bailouts, and subsequent recession was caused by the misconduct of the nations largest banks and financial firms. These megabanks have proven, at great cost to American taxpayers, that they cannot be effectively managed, supervised or disciplined. They are clearly too-big-to-change, too-big-to-fail and must be downsized. TBTNCI The recent failures of two large banks in early 2023, and the FDIC insuring 100% of their uninsured deposits, have raised new concerns about deposit insurance and have prompted calls for broader FDIC reforms. If systemically important financial institutions (SIFIs) cause losses to the Deposit Insurance Fund (DIF) then SIFIs should be responsible for reimbursing the DIF for those losses. Legitimate Bank Service Charges and Fees are not Exploitive and Junk Fees CBAI does not support overdraft policies and practices that abuse consumers. Policymakers must accept that it is the consumers responsibility to always know their account balance and not write checks or initiate debit transactions that would overdraw their account. The cost for processing overdrafts may include returning the item or paying the overdraft which creates the equivalent of an unauthorized, unsecured, and interest-free loan. Effectively managing risks associated with overdrafts is a safety and soundness regulatory requirement. Realistic Perspective on Financial Inclusion CBAI supports government initiatives that educate consumers and encourage financial inclusion, but it is not the proper role of government to provide banking services direct to individuals either through the Federal Reserve, state-owned public banks, or the U.S. Postal Service. Providing banking services to individuals and businesses is the proper role of the private-sector banking system. Government can assist the private sector in financial inclusion efforts especially to low- and middle-income consumers, which are those most likely to be un- or underbanked. 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, where SBA does not compete with banks in lending to small businesses. Direct SBA lending would violate this tradition. Community banks are far superior in establishing and prudently underwriting commercial lending relationships. The SBA originating and disbursing 7(a) loans will put billions of taxpayer dollars at risk of loss. Postal Banking Postal banking is misguided and any entry of the USPS (Postal Service) into banking services is a significant government-sponsored, competitive threat to the viability of tax-paying community banks. Public Banking Public banking (i.e., publicly owned banks) is misguided and is a significant government-sponsored, competitive threat to the viability of tax-paying community banks. Responsible Regulation of Digital Assets - Cryptocurrency, Central Bank Digital Currency (CBDC), and Stablecoins The risks posed by digital assets are enormous, as well as the consequences for monetary policy, our financial system, and the banking industry (i.e., disintermediation.). They also pose threats to the privacy and security of consumers and small businesses. Of great concern is that 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 cooperate and collaborate in the development and implementation of a comprehensive approach to ensure a consistent Federal regulatory framework that does not permit digital assets to threaten the essential and highly successful business model of regulated and responsible community banks. Federal Home Loan Banks in their Comprehensive Review Most community banks are members and shareholders of their regional Federal Home Loan Bank (FHLB). The FHLBs provide short-term liquidity, long-term funding, mortgage-related products, and other financial services in order to help their members provide affordable credit to the local communities they serve. The regional structure, special functions, and unique purpose of the FHLBs must be recognized and maintained by the Federal Housing Finance Agency (FHFA). As the Administration and Congress consider reforming the housing finance system, care must be taken not to harm the FHLBs. They must remain healthy, stable, and reliable sources of funding for their members. The results of the Comprehensive Review by the FHFA should not disrupt the cooperative structure, regional nature, special functions, and the unique purposes of the FHLBanks. Reasonable Rules and Implementation Small Business Data Collection (CFPB) Small business lending data clearly suggests fair lending is not a problem at community banks as they treat their customers honestly and fairly. The regulatory burden of these collection and reporting requirements falls disproportionately hard on community banks, and community banks should be provided with meaningful exemptions in this rulemaking. Customer Data Sharing (CFPB) Community banks are financially sound and take great care in protecting consumer privacy. Non-bank entities must be held responsible for ensuring the safety of the customer information they are accessing and to be able to satisfy the liability for any financial harm which they cause community banks and their consumers. Modernizing the Community Reinvestment Act (CRA) (OCC, Federal Reserve and FDIC) The modernization of the CRA must enhance the ability of community banks to serve their communities and must not impose any additional regulatory burden. All financial service providers must be subject to the CRA to provide a complete picture of every financial institutions performance in serving their communities. A modernization of the CRA that does not encompass credit unions, Farm Credit System lenders and Fintechs (including the OCCs Special Purpose National Banks) will be a sham. Reporting Beneficial Ownership Information (FinCEN) Provisions in the NDAA in the 116th Congress shifted the burden of collecting and reporting beneficial ownership to FinCEN. This transfer must be accomplished completely and expeditiously. Safe Harbor for Banking Cannabis-Related Businesses Without taking a position on the legalization of cannabis, a safe harbor from federal sanctions for financial institutions that choose to serve legally compliant cannabis-related business in states where cannabis is legal is a matter of public safety and should be permitted. Closing the Industrial Loan Company (ILC) Regulatory Loophole ILCs represent the unacceptable mixing of banking and commerce. They pose risks to the financial system, our economy and American taxpayers. ILCs are the functional equivalent of banks and should be properly regulated. The loophole permits their holding companies from being supervised and regulated by the Federal Reserve - and must be closed. Agriculture and Rural America A vibrant rural economy is vital to Americas prosperity. The multi-year Farm Bill provided a strong safety net for farmers and ranchers including adequate price-protection programs and enhanced USDA-guaranteed farm and business loan programs. These programs must be protected from cuts or any adverse changes that would discourage farmer and rancher participation or undermine private-sector delivery. Federal Reserves Role in Payments System Improvement (FedNow Service) A fast and secure payments system is the very foundation of financial services and the economy and must be modernized. The payments system must not be monopolized by The Clearing House and its 25 large bank owners that endangered our financial system and the entire economy during the financial crisis. Community banks, small businesses and consumers must rely on the Federal Reserve to provide access to a safe and secure payments system. The Federal Reserve must be supported in its development of the FedNow Service to ensure that all participants have access to a real-time system on a fair and impartial basis. Appropriate Regulations of Fintechs and Innovation in Financial Services Financial innovation presents community banks with challenges and opportunities which they are rising to meet. Policymakers should reasonably assist community banks to prepare for this new and evolving era, not pose any unreasonable requirements, and not give fintechs any competitive advantages over community banks by subjecting them to lesser regulatory requirements. IRS Reporting Plan The various proposed IRS reporting requirements are unprecedented, misguided, raise serious concerns about government overreach, and is an invasion of their financial privacy. If implemented, they will damage the trusted and beneficial relationship between community banks and their customers. If the IRS wants to ensure greater compliance with tax laws, it can be accomplished by more appropriately using the existing tools and the wealth of information it currently possesses. Harmful Climate Risk Regulations CBAI opposes any climate change regulations that will adversely impact community banks and their ability to support their customers and communities including setting hard lending concentration limits on lending to fossil fuel or other carbon-intensive industries, stress testing or scenario analysis based on adverse climate change assumptions, and capital requirements based on climate risks. Community bankers high-contact and relationship-based lending model together with the soon-to-be-implemented Current Expected Credit Loss model, will incorporate material risk assumptions in estimating loan losses - including climate risks. Additional separate climate risk stress testing, concentration limits, and capital requirements for community banks are duplicative and unnecessary. (House and Senate) Legislation and Regulation - H.R. 3139 and S. 2371- ACRE Act of 2023 (Access to Credit for our Rural Economy Act) (All Sections), legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate and residences in small rural communities (House and Senate) S. 3502 and H.R. 7297 - Trigger Leads Abatement Act (All Sections) a bill 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. 3638 - Close the Shadow Banking Loophole Act (All Sections) to prevent large companies from gaining access to the federal safety net and escaping federal oversight and supervision by the Federal Reserve (House and Senate) S. 1838 - Credit Card Competition Act of 2023 (All Sections) to amend the Electronic Fund Transfer Act to require the Board of Governors of the Federal Reserve System to prescribe regulations relating to network access and competition in credit card transactions (House) S.J.Res 32 - Joint Resolution nullifying the CFPBs Section 1071 - Small Business Data Collection Rule (House) S. 2860 - SAFER Banking Act (All Sections) to provide protections for federally regulated financial institutions that serve state-sanctioned marijuana businesses (House and Senate) Farm Bill - The Passage of a five-year Farm Bill with community bank priorities and without FCS expansion including higher limits on USDA guaranteed farm loans, quicker turnaround time for USDA Express loan approvals, and without and expansion of the Farm Credit System or their exemption from Dodd-Frank Section 1071 (House and Senate) Letters - Comment Letter to the CFPB regarding Proposed Rule - Overdraft Lending: Very Large Financial Institutions - Docket No. CFPB-2024-0002 and RIN 3170-AA42 (CFPB) Comment Letter to the OCC, Federal Reserve and FDIC - Regulatory Publication and Review Under Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), Docket ID OCC-2023-0016, Federal Reserve Board Docket No. OP-1828, and FDIC - EGRPRA - specifically, tiered and appropriate regulations for community banks, closing the Industrial Loan Company loophole, favorable climate for de novo community bank formation (OCC, Federal Reserve and FDIC) Comment Letter to the Federal Reserve - Debit Card Interchange Fees and Routing requirements - Docket No. R-1818, RIN 7100-AG67 (Federal Reserve) CBAI-led joint trades letter with the Illinois Farm Bureau, Illinois Corn Growers Association, Illinois Soybean Growers, and the Grain and Feed Association of Illinois regarding H.R. 3139 and S. 2371- The ACRE Act (Access to Credit for our Rural Economy Act) (All Sections), which is legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate (House and Senate) Action Alerts - Action Alert - Urge Congress to Pass Farm Bill with community bank priorities and without FCS expansion including higher limits on USDA guaranteed farm loans, quicker turnaround time for USDA Express loan approvals, and without and expansion of the Farm Credit System or their exemption from Dodd-Frank Section 1071 (House) Miscellaneous - Residential mortgage Trigger Leads (CFPB) 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 (House and Senate, OCC, Federal Reserve and FDIC) Federal Reserve balance sheet (Federal Reserve) Resignation of FDIC Chairman Martin Gruenberg (House) Stopping bank regulatory overreach (House, Senate and Federal Reserve) Community Reinvestment Act (CRA), transfer of beneficial ownership reporting requirements (BOI) to FinCEN, Small Business Data Collection (Dodd-Frank Section 1071), consumer access to financial records (Dodd-Frank Section 1033), credit unions, Farm Credit System, check fraud, and financial services/banking industry consolidation (Federal Reserve) Too-big-to-fail and stronger capital requirements for the largest banks (House)

Client expense: $65,000 · Firm income: Not reported

Government targets: Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Reserve System, HOUSE OF REPRESENTATIVES, Office of the Comptroller of the Currency (OCC), SENATE

CBAI Federal Policy Priorities - The Community Bankers Association of Illinois (CBAI) supports fair competition for financial services, tiered regulations, the separation of banking and commerce, the dual banking system/charter choice, and financial innovation; and opposes discrimination favoring certain financial service providers, banking industry consolidation, and systemic risk. Based on these guiding principles, CBAI has identified the following 2023 Federal Legislative and Regulatory Policy Priorities, which if implemented, will help community banks thrive and better serve their customers and communities. Traditional Issues, Opportunities and Concerns Additional Meaningful Regulatory Relief for Community Banks The importance of community banks cannot be overstated, and they serve their customers and communities honestly and with respect. 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. Community Bank Position on Credit Unions and Their Expanded Powers Credit unions have long since strayed from their founding purpose of serving individuals of modest means and with a common bond. They blatantly abuse their competitive advantages and are virtually indistinguishable from tax-paying community banks. Credit union acquisitions of community banks is a recent and disturbing trend that negatively impacts all taxpayers. An exit fee should be imposed on these acquisitions. This escalation of credit unions abusing of their tax-exemption should prompt Congress to act now. This abuse is an existential threat to community banks and the communities they serve. Community Bank Position on the Farm Credit System and its Expanded Powers The Farm Credit System (FCS) has long since strayed from its founding purposes, blatantly abusing its competitive advantages against community banks. The FCS is the only GSE that competes directly with community banks. This blatant and continuing discrimination against community banks must end and FCS competitive advantages must be reined-in, and the playing field leveled for community banks. Financial Transaction Tax Tax laws should encourage and promote robust economic activity and a thriving community banking sector, not impose new bank-specific fees, punitive new levies, transaction taxes, limitations on the deductibility of expenses, revenue offsets or pay-fors that target the banking industry. Rather, there should be parity among all financial service providers; there should be tax incentives for community banks serving low- and moderate-income individuals, small businesses, and small farms; and there should be a tax credit equivalent to the cost of community bank compliance with BSA compliance. Current Issues, Opportunities and Concerns Finally Address the Risks of Too-Big-To-Fail (and now Too-Big-To-Not-Completely-Insure) Banks and Financial Firms to Protect Our Financial System, the Economy, and American Taxpayers from Future Bailouts TBTF The financial crisis, taxpayer bailouts, and subsequent recession was caused by the misconduct of the nations largest banks and financial firms. These megabanks have proven, at great cost to American taxpayers, that they cannot be effectively managed, supervised or disciplined. They are clearly too-big-to-change, too-big-to-fail and must be downsized. TBTNCI The recent failures of two large banks in early 2023, and the FDIC insuring 100% of their uninsured deposits, have raised new concerns about deposit insurance and have prompted calls for broader FDIC reforms. If systemically important financial institutions (SIFIs) cause losses to the Deposit Insurance Fund (DIF) then SIFIs should be responsible for reimbursing the DIF for those losses. Responsible Regulation of Digital Assets - Cryptocurrency, Central Bank Digital Currency (CBDC), and Stablecoins The risks posed by digital assets are enormous, as well as the consequences for monetary policy, our financial system, and the banking industry (i.e., disintermediation.). They also pose threats to the privacy and security of consumers and small businesses. Of great concern is that 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 cooperate and collaborate in the development and implementation of a comprehensive approach to ensure a consistent Federal regulatory framework that does not permit digital assets to threaten the essential and highly successful business model of regulated and responsible community banks. Reasonable Rules and Implementation Modernizing the Community Reinvestment Act (CRA) (OCC, Federal Reserve and FDIC) The modernization of the CRA must enhance the ability of community banks to serve their communities and must not impose any additional regulatory burden. All financial service providers must be subject to the CRA to provide a complete picture of every financial institutions performance in serving their communities. A modernization of the CRA that does not encompass credit unions, Farm Credit System lenders and Fintechs (including the OCCs Special Purpose National Banks) will be a sham. Agriculture and Rural America A vibrant rural economy is vital to Americas prosperity. The multi-year Farm Bill provided a strong safety net for farmers and ranchers including adequate price-protection programs and enhanced USDA-guaranteed farm and business loan programs. These programs must be protected from cuts or any adverse changes that would discourage farmer and rancher participation or undermine private-sector delivery. IRS Reporting Plan The various proposed IRS reporting requirements are unprecedented, misguided, raise serious concerns about government overreach, and is an invasion of their financial privacy. If implemented, they will damage the trusted and beneficial relationship between community banks and their customers. If the IRS wants to ensure greater compliance with tax laws, it can be accomplished by more appropriately using the existing tools and the wealth of information it currently possesses. (House and Senate) Legislation and Regulation - H.R. 3139 and S. 2371- ACRE Act of 2023 (Access to Credit for our Rural Economy Act) (All Sections), legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate and residences in small rural communities (House and Senate) S. 3502 and H.R. 7297 - Trigger Leads Abatement Act (All Sections) a bill 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) Farm Bill - The Passage of a five-year Farm Bill with community bank priorities and without FCS expansion including higher limits on USDA guaranteed farm loans, quicker turnaround time for USDA Express loan approvals, and without and expansion of the Farm Credit System or their exemption from Dodd-Frank Section 1071 (House and Senate) Letters - CBAI-led joint trades letter with the Illinois Farm Bureau, Illinois Corn Growers Association, Illinois Soybean Growers, and the Grain and Feed Association of Illinois regarding H.R. 3139 and S. 2371- The ACRE Act (Access to Credit for our Rural Economy Act) (All Sections), which is legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate (House and Senate) Action Alerts - Action Alert - Urge Congress to Pass Farm Bill with community bank priorities and without FCS expansion including higher limits on USDA guaranteed farm loans, quicker turnaround time for USDA Express loan approvals, and without and expansion of the Farm Credit System or their exemption from Dodd-Frank Section 1071 (House) Miscellaneous - Community Reinvestment Act (CRA), transfer of beneficial ownership reporting requirements (BOI) to FinCEN, Small Business Data Collection (Dodd-Frank Section 1071), consumer access to financial records (Dodd-Frank Section 1033), credit unions, Farm Credit System, check fraud, and financial services/banking industry consolidation (Federal Reserve)

Client expense: $65,000 · Firm income: Not reported

Government targets: Federal Reserve System, HOUSE OF REPRESENTATIVES, SENATE

CBAI Federal Policy Priorities - The Community Bankers Association of Illinois (CBAI) supports fair competition for financial services, tiered regulations, the separation of banking and commerce, the dual banking system/charter choice, and financial innovation; and opposes discrimination favoring certain financial service providers, banking industry consolidation, and systemic risk. Based on these guiding principles, CBAI has identified the following 2023 Federal Legislative and Regulatory Policy Priorities, which if implemented, will help community banks thrive and better serve their customers and communities. Traditional Issues, Opportunities and Concerns Additional Meaningful Regulatory Relief for Community Banks The importance of community banks cannot be overstated, and they serve their customers and communities honestly and with respect. 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. Community Bank Position on Credit Unions and Their Expanded Powers Credit unions have long since strayed from their founding purpose of serving individuals of modest means and with a common bond. They blatantly abuse their competitive advantages and are virtually indistinguishable from tax-paying community banks. Credit union acquisitions of community banks is a recent and disturbing trend that negatively impacts all taxpayers. An exit fee should be imposed on these acquisitions. This escalation of credit unions abusing of their tax-exemption should prompt Congress to act now. This abuse is an existential threat to community banks and the communities they serve. Community Bank Position on the Farm Credit System and its Expanded Powers The Farm Credit System (FCS) has long since strayed from its founding purposes, blatantly abusing its competitive advantages against community banks. The FCS is the only GSE that competes directly with community banks. This blatant and continuing discrimination against community banks must end and FCS competitive advantages must be reined-in, and the playing field leveled for community banks. Current Issues, Opportunities and Concerns Finally Address the Risks of Too-Big-To-Fail (and now Too-Big-To-Not-Completely-Insure) Banks and Financial Firms to Protect Our Financial System, the Economy, and American Taxpayers from Future Bailouts TBTF The financial crisis, taxpayer bailouts, and subsequent recession was caused by the misconduct of the nations largest banks and financial firms. These megabanks have proven, at great cost to American taxpayers, that they cannot be effectively managed, supervised or disciplined. They are clearly too-big-to-change, too-big-to-fail and must be downsized. TBTNCI The recent failures of two large banks in early 2023, and the FDIC insuring 100% of their uninsured deposits, have raised new concerns about deposit insurance and have prompted calls for broader FDIC reforms. If systemically important financial institutions (SIFIs) cause losses to the Deposit Insurance Fund (DIF) then SIFIs should be responsible for reimbursing the DIF for those losses. Reasonable Rules and Implementation Modernizing the Community Reinvestment Act (CRA) (OCC, Federal Reserve and FDIC) The modernization of the CRA must enhance the ability of community banks to serve their communities and must not impose any additional regulatory burden. All financial service providers must be subject to the CRA to provide a complete picture of every financial institutions performance in serving their communities. A modernization of the CRA that does not encompass credit unions, Farm Credit System lenders and Fintechs (including the OCCs Special Purpose National Banks) will be a sham. Agriculture and Rural America A vibrant rural economy is vital to Americas prosperity. The multi-year Farm Bill provided a strong safety net for farmers and ranchers including adequate price-protection programs and enhanced USDA-guaranteed farm and business loan programs. These programs must be protected from cuts or any adverse changes that would discourage farmer and rancher participation or undermine private-sector delivery. Federal Reserves Role in Payments System Improvement (FedNow Service) A fast and secure payments system is the very foundation of financial services and the economy and must be modernized. The payments system must not be monopolized by The Clearing House and its 25 large bank owners that endangered our financial system and the entire economy during the financial crisis. Community banks, small businesses and consumers must rely on the Federal Reserve to provide access to a safe and secure payments system. The Federal Reserve must be supported in its development of the FedNow Service to ensure that all participants have access to a real-time system on a fair and impartial basis. (House and Senate) Legislation and Regulation - H.R. 3139 and S. 2371- ACRE Act of 2023 (Access to Credit for our Rural Economy Act) (All Sections), legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate and residences in small rural communities (House and Senate) Farm Bill - The Passage of a five-year Farm Bill with community bank priorities and without FCS expansion including higher limits on USDA guaranteed farm loans, quicker turnaround time for USDA Express loan approvals, and without and expansion of the Farm Credit System or their exemption from Dodd-Frank Section 1071 (House and Senate) Letters - CBAI-led joint trades letter with the Illinois Farm Bureau, Illinois Corn Growers Association, Illinois Soybean Growers, and the Grain and Feed Association of Illinois regarding H.R. 3139 and S. 2371- The ACRE Act (Access to Credit for our Rural Economy Act) (All Sections), which is legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate (House and Senate) Action Alerts - Action Alert - Urge Congress to Pass Farm Bill with community bank priorities and without FCS expansion including higher limits on USDA guaranteed farm loans, quicker turnaround time for USDA Express loan approvals, and without and expansion of the Farm Credit System or their exemption from Dodd-Frank Section 1071 (House) Miscellaneous - Community Reinvestment Act (CRA), transfer of beneficial ownership reporting requirements (BOI) to FinCEN, Small Business Data Collection (Dodd-Frank Section 1071), consumer access to financial records (Dodd-Frank Section 1033), credit unions, Farm Credit System, check fraud, and financial services/banking industry consolidation (Federal Reserve)

Client expense: $65,000 · Firm income: Not reported

Government targets: Federal Reserve System, HOUSE OF REPRESENTATIVES, SENATE

CBAI Federal Policy Priorities - The Community Bankers Association of Illinois (CBAI) supports fair competition for financial services, tiered regulations, the separation of banking and commerce, the dual banking system/charter choice, and financial innovation; and opposes discrimination favoring certain financial service providers, banking industry consolidation, and systemic risk. Based on these guiding principles, CBAI has identified the following 2023 Federal Legislative and Regulatory Policy Priorities, which if implemented, will help community banks thrive and better serve their customers and communities. Traditional Issues, Opportunities and Concerns Additional Meaningful Regulatory Relief for Community Banks The importance of community banks cannot be overstated, and they serve their customers and communities honestly and with respect. 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. Community Bank Position on Credit Unions and Their Expanded Powers Credit unions have long since strayed from their founding purpose of serving individuals of modest means and with a common bond. They blatantly abuse their competitive advantages and are virtually indistinguishable from tax-paying community banks. Credit union acquisitions of community banks is a recent and disturbing trend that negatively impacts all taxpayers. An exit fee should be imposed on these acquisitions. This escalation of credit unions abusing of their tax-exemption should prompt Congress to act now. This abuse is an existential threat to community banks and the communities they serve. Community Bank Position on the Farm Credit System and its Expanded Powers The Farm Credit System (FCS) has long since strayed from its founding purposes, blatantly abusing its competitive advantages against community banks. The FCS is the only GSE that competes directly with community banks. This blatant and continuing discrimination against community banks must end and FCS competitive advantages must be reined-in, and the playing field leveled for community banks. Enhanced Data, Cyber and Payment Card Security (Data Security) Enhanced security standards should be enforced through a tiered system where the more restrictive rules and are imposed on the largest and most critical members of the financial system and economy where their lapses pose the greatest threat to the largest number of consumers. Core data security principals in standards enacted by legislation and regulations must include the complete cost of data breaches being borne by that party that caused the breach; all participants should be subject to verifiable Gramm-Leach-Bliley Act-like data security standards; and any new data security standard proposals should ensure that community banks are not overburdened with redundant standards. Consumer Financial Protection Bureau (CFPB) Reform and Meaningful Exemptions for Community Banks Regulations promulgated by the CFPB must provide community banks with the flexibility to meet the needs of its customers and they must not be burdened with additional and unnecessary regulatory requirements that would prevent them from serving their customers and communities. A one-size-fits-all approach to CFPB regulations harms the successful community bank business model. 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, these firm should be robustly supervised and examined; and the focus of any enhanced regulation of financial products should be on the mega banks and financial firms, the unregulated shadow financial industry and emerging Fintech companies. The CFPB has the statutory authority under the Dodd-Frank Act to exempt any class of providers [community banks] or any products or services from the rules it writes, but to-date the Bureau has been far too reticent to do so. The effective use of this authority will ensure community banks continue to be a healthy alternative to large banks and non-banks for consumers seeking to use responsible financial service providers. Financial Transaction Tax Tax laws should encourage and promote robust economic activity and a thriving community banking sector, not impose new bank-specific fees, punitive new levies, transaction taxes, limitations on the deductibility of expenses, revenue offsets or pay-fors that target the banking industry. Rather, there should be parity among all financial service providers; there should be tax incentives for community banks serving low- and moderate-income individuals, small businesses, and small farms; and there should be a tax credit equivalent to the cost of community bank compliance with BSA compliance. Current Issues, Opportunities and Concerns Bank Regulators Involvement in Resolving Reimbursement for Fraudulently Altered Returned Checks CBAIs member community banks have been experiencing a pernicious and growing problem with reimbursements for fraudulently altered checks drawn on their customers accounts. The problem can be accurately summarized as being caused by the nations largest banks and credit union, where these checks were deposited in fraudulent accounts, which is harming community banks and their customers, in addition to undermining the publics confidence in the nations banking and financial system. CBAI has urged the regulators to get involved and address this problem. Finally Address the Risks of Too-Big-To-Fail (and now Too-Big-To-Not-Completely-Insure) Banks and Financial Firms to Protect Our Financial System, the Economy, and American Taxpayers from Future Bailouts TBTF The financial crisis, taxpayer bailouts, and subsequent recession was caused by the misconduct of the nations largest banks and financial firms. These megabanks have proven, at great cost to American taxpayers, that they cannot be effectively managed, supervised or disciplined. They are clearly too-big-to-change, too-big-to-fail and must be downsized. TBTNCI The recent failures of two large banks in early 2023, and the FDIC insuring 100% of their uninsured deposits, have raised new concerns about deposit insurance and have prompted calls for broader FDIC reforms. If systemically important financial institutions (SIFIs) cause losses to the Deposit Insurance Fund (DIF) then SIFIs should be responsible for reimbursing the DIF for those losses. 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, where SBA does not compete with banks in lending to small businesses. Direct SBA lending would violate this tradition. Community banks are far superior in establishing and prudently underwriting commercial lending relationships. The SBA originating and disbursing 7(a) loans will put billions of taxpayer dollars at risk of loss. Responsible Regulation of Digital Assets - Cryptocurrency, Central Bank Digital Currency (CBDC), and Stablecoins The risks posed by digital assets are enormous, as well as the consequences for monetary policy, our financial system, and the banking industry (i.e., disintermediation.). They also pose threats to the privacy and security of consumers and small businesses. Of great concern is that 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 cooperate and collaborate in the development and implementation of a comprehensive approach to ensure a consistent Federal regulatory framework that does not permit digital assets to threaten the essential and highly successful business model of regulated and responsible community banks. Reasonable Rules and Implementation Small Business Data Collection (CFPB) Small business lending data clearly suggests fair lending is not a problem at community banks as they treat their customers honestly and fairly. The regulatory burden of these collection and reporting requirements falls disproportionately hard on community banks, and community banks should be provided with meaningful exemptions in this rulemaking. Customer Data Sharing (CFPB) Community banks are financially sound and take great care in protecting consumer privacy. Non-bank entities must be held responsible for ensuring the safety of the customer information they are accessing and to be able to satisfy the liability for any financial harm which they cause community banks and their consumers. Modernizing the Community Reinvestment Act (CRA) (OCC, Federal Reserve and FDIC) The modernization of the CRA must enhance the ability of community banks to serve their communities and must not impose any additional regulatory burden. All financial service providers must be subject to the CRA to provide a complete picture of every financial institutions performance in serving their communities. A modernization of the CRA that does not encompass credit unions, Farm Credit System lenders and Fintechs (including the OCCs Special Purpose National Banks) will be a sham. Reporting Beneficial Ownership Information (FinCEN) Provisions in the NDAA in the 116th Congress shifted the burden of collecting and reporting beneficial ownership to FinCEN. This transfer must be accomplished completely and expeditiously. Safe Harbor for Banking Cannabis-Related Businesses Without taking a position on the legalization of cannabis, a safe harbor from federal sanctions for financial institutions that choose to serve legally compliant cannabis-related business in states where cannabis is legal is a matter of public safety and should be permitted. Agriculture and Rural America A vibrant rural economy is vital to Americas prosperity. The multi-year Farm Bill provided a strong safety net for farmers and ranchers including adequate price-protection programs and enhanced USDA-guaranteed farm and business loan programs. These programs must be protected from cuts or any adverse changes that would discourage farmer and rancher participation or undermine private-sector delivery. Federal Reserves Role in Payments System Improvement (FedNow Service) A fast and secure payments system is the very foundation of financial services and the economy and must be modernized. The payments system must not be monopolized by The Clearing House and its 25 large bank owners that endangered our financial system and the entire economy during the financial crisis. Community banks, small businesses and consumers must rely on the Federal Reserve to provide access to a safe and secure payments system. The Federal Reserve must be supported in its development of the FedNow Service to ensure that all participants have access to a real-time system on a fair and impartial basis. IRS Reporting Plan The various proposed IRS reporting requirements are unprecedented, misguided, raise serious concerns about government overreach, and is an invasion of their financial privacy. If implemented, they will damage the trusted and beneficial relationship between community banks and their customers. If the IRS wants to ensure greater compliance with tax laws, it can be accomplished by more appropriately using the existing tools and the wealth of information it currently possesses. Harmful Climate Risk Regulations CBAI opposes any climate change regulations that will adversely impact community banks and their ability to support their customers and communities including setting hard lending concentration limits on lending to fossil fuel or other carbon-intensive industries, stress testing or scenario analysis based on adverse climate change assumptions, and capital requirements based on climate risks. Community bankers high-contact and relationship-based lending model together with the soon-to-be-implemented Current Expected Credit Loss model, will incorporate material risk assumptions in estimating loan losses - including climate risks. Additional separate climate risk stress testing, concentration limits, and capital requirements for community banks are duplicative and unnecessary. (House and Senate) Legislation and Regulation - H.R. 3139 and S. 2371- ACRE Act of 2023 (Access to Credit for our Rural Economy Act) (All Sections), legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate and residences in small rural communities (House and Senate) S. 1838 - Credit Card Competition Act of 2023 (All Sections) to amend the Electronic Fund Transfer Act to require the Board of Governors of the Federal Reserve System to prescribe regulations relating to network access and competition in credit card transactions (House) S.J.Res 32 - Joint Resolution nullifying the CFPBs Section 1071 - Small Business Data Collection Rule (House) S. 2860 - SAFER Banking Act (All Sections) to provide protections for federally regulated financial institutions that serve state-sanctioned marijuana businesses (House and Senate) Farm Bill - The Passage of a five-year Farm Bill with community bank priorities and without FCS expansion including higher limits on USDA guaranteed farm loans, quicker turnaround time for USDA Express loan approvals, and without and expansion of the Farm Credit System or their exemption from Dodd-Frank Section 1071 (House and Senate) Letters - Comment Letter to the Federal Reserve - Debit Card Interchange Fees and Routing requirements - Docket No. R-1818, RIN 7100-AG67 (Federal Reserve) CBAI-led joint trades letter with the Illinois Farm Bureau, Illinois Corn Growers Association, Illinois Soybean Growers, and the Grain and Feed Association of Illinois regarding H.R. 3139 and S. 2371- The ACRE Act (Access to Credit for our Rural Economy Act) (All Sections), which is legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate (House and Senate) Action Alerts - Action Alert - Urge Congress to Pass Farm Bill with community bank priorities and without FCS expansion including higher limits on USDA guaranteed farm loans, quicker turnaround time for USDA Express loan approvals, and without and expansion of the Farm Credit System or their exemption from Dodd-Frank Section 1071 (House) Miscellaneous - 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 (House and Senate, OCC, Federal Reserve and FDIC) Community Reinvestment Act (CRA), transfer of beneficial ownership reporting requirements (BOI) to FinCEN, Small Business Data Collection (Dodd-Frank Section 1071), consumer access to financial records (Dodd-Frank Section 1033), credit unions, Farm Credit System, check fraud, and financial services/banking industry consolidation (Federal Reserve)

Client expense: $65,000 · Firm income: Not reported

Government targets: Federal Deposit Insurance Corporation (FDIC), Federal Reserve System, HOUSE OF REPRESENTATIVES, Office of the Comptroller of the Currency (OCC), SENATE

CBAI Federal Policy Priorities - The Community Bankers Association of Illinois (CBAI) supports fair competition for financial services, tiered regulations, the separation of banking and commerce, the dual banking system/charter choice, and financial innovation; and opposes discrimination favoring certain financial service providers, banking industry consolidation, and systemic risk. Based on these guiding principles, CBAI has identified the following 2023 Federal Legislative and Regulatory Policy Priorities, which if implemented, will help community banks thrive and better serve their customers and communities. Traditional Issues, Opportunities and Concerns Additional Meaningful Regulatory Relief for Community Banks The importance of community banks cannot be overstated, and they serve their customers and communities honestly and with respect. 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. Community Bank Position on Credit Unions and Their Expanded Powers Credit unions have long since strayed from their founding purpose of serving individuals of modest means and with a common bond. They blatantly abuse their competitive advantages and are virtually indistinguishable from tax-paying community banks. Credit union acquisitions of community banks is a recent and disturbing trend that negatively impacts all taxpayers. An exit fee should be imposed on these acquisitions. This escalation of credit unions abusing of their tax-exemption should prompt Congress to act now. This abuse is an existential threat to community banks and the communities they serve. Enhanced Data, Cyber and Payment Card Security (Data Security) Enhanced security standards should be enforced through a tiered system where the more restrictive rules and are imposed on the largest and most critical members of the financial system and economy where their lapses pose the greatest threat to the largest number of consumers. Core data security principals in standards enacted by legislation and regulations must include the complete cost of data breaches being borne by that party that caused the breach; all participants should be subject to verifiable Gramm-Leach-Bliley Act-like data security standards; and any new data security standard proposals should ensure that community banks are not overburdened with redundant standards. Consumer Financial Protection Bureau (CFPB) Reform and Meaningful Exemptions for Community Banks Regulations promulgated by the CFPB must provide community banks with the flexibility to meet the needs of its customers and they must not be burdened with additional and unnecessary regulatory requirements that would prevent them from serving their customers and communities. A one-size-fits-all approach to CFPB regulations harms the successful community bank business model. 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, these firm should be robustly supervised and examined; and the focus of any enhanced regulation of financial products should be on the mega banks and financial firms, the unregulated shadow financial industry and emerging Fintech companies. The CFPB has the statutory authority under the Dodd-Frank Act to exempt any class of providers [community banks] or any products or services from the rules it writes, but to-date the Bureau has been far too reticent to do so. The effective use of this authority will ensure community banks continue to be a healthy alternative to large banks and non-banks for consumers seeking to use responsible financial service providers. Sound Principles for Housing Government Sponsored Entity (GSE) Reform The seemingly endless and ongoing period of government ownership and control of Fannie and Freddie must come to an end. GSE reform remains critically important to the future of the housing market and the U.S. economy. Community banks depend on the GSE for direct access to the secondary market. The GSEs must provide a steady and reliable source of funding for home mortgage lending for lenders of all sizes and through all economic cycles. This is particularly critical to maintaining liquidity when the markets are experiencing financial stress. Financial Transaction Tax Tax laws should encourage and promote robust economic activity and a thriving community banking sector, not impose new bank-specific fees, punitive new levies, transaction taxes, limitations on the deductibility of expenses, revenue offsets or pay-fors that target the banking industry. Rather, there should be parity among all financial service providers; there should be tax incentives for community banks serving low- and moderate-income individuals, small businesses, and small farms; and there should be a tax credit equivalent to the cost of community bank compliance with BSA compliance. Current Issues, Opportunities and Concerns Bank Regulators Involvement in Resolving Reimbursement for Fraudulently Altered Returned Checks CBAIs member community banks have been experiencing a pernicious and growing problem with reimbursements for fraudulently altered checks drawn on their customers accounts. The problem can be accurately summarized as being caused by the nations largest banks and credit union, where these checks were deposited in fraudulent accounts, which is harming community banks and their customers, in addition to undermining the publics confidence in the nations banking and financial system. CBAI has urged the regulators to get involved and address this problem. Finally Address the Risks of Too-Big-To-Fail (and now Too-Big-To-Not-Completely-Insure) Banks and Financial Firms to Protect Our Financial System, the Economy, and American Taxpayers from Future Bailouts TBTF The financial crisis, taxpayer bailouts, and subsequent recession was caused by the misconduct of the nations largest banks and financial firms. These megabanks have proven, at great cost to American taxpayers, that they cannot be effectively managed, supervised or disciplined. They are clearly too-big-to-change, too-big-to-fail and must be downsized. TBTNCI The recent failures of two large banks in early 2023, and the FDIC insuring 100% of their uninsured deposits, have raised new concerns about deposit insurance and have prompted calls for broader FDIC reforms. If systemically important financial institutions (SIFIs) cause losses to the Deposit Insurance Fund (DIF) then SIFIs should be responsible for reimbursing the DIF for those losses. Legitimate Bank Service Charges and Fees are not Exploitive and Junk Fees CBAI does not support overdraft policies and practices that abuse consumers. Policymakers must accept that it is the consumers responsibility to always know their account balance and not write checks or initiate debit transactions that would overdraw their account. The cost for processing overdrafts may include returning the item or paying the overdraft which creates the equivalent of an unauthorized, unsecured, and interest-free loan. Effectively managing risks associated with overdrafts is a safety and soundness regulatory requirement. Realistic Perspective on Financial Inclusion CBAI supports government initiatives that educate consumers and encourage financial inclusion, but it is not the proper role of government to provide banking services direct to individuals either through the Federal Reserve, state-owned public banks, or the U.S. Postal Service. Providing banking services to individuals and businesses is the proper role of the private-sector banking system. Government can assist the private sector in financial inclusion efforts especially to low- and middle-income consumers, which are those most likely to be un- or underbanked. Governments Unnecessary Intrusion into Banking and Lending Which Displaces Community Banks. Postal Banking Postal banking is misguided and any entry of the USPS (Postal Service) into banking services is a significant government-sponsored, competitive threat to the viability of tax-paying community banks. Public Banking Public banking (i.e., publicly owned banks) is misguided and is a significant government-sponsored, competitive threat to the viability of tax-paying community banks. Responsible Regulation of Digital Assets - Cryptocurrency, Central Bank Digital Currency (CBDC), and Stablecoins The risks posed by digital assets are enormous, as well as the consequences for monetary policy, our financial system, and the banking industry (i.e., disintermediation.). They also pose threats to the privacy and security of consumers and small businesses. Of great concern is that 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 cooperate and collaborate in the development and implementation of a comprehensive approach to ensure a consistent Federal regulatory framework that does not permit digital assets to threaten the essential and highly successful business model of regulated and responsible community banks. Federal Home Loan Banks in their Comprehensive Review Most community banks are members and shareholders of their regional Federal Home Loan Bank (FHLB). The FHLBs provide short-term liquidity, long-term funding, mortgage-related products, and other financial services in order to help their members provide affordable credit to the local communities they serve. The regional structure, special functions, and unique purpose of the FHLBs must be recognized and maintained by the Federal Housing Finance Agency (FHFA). As the Administration and Congress consider reforming the housing finance system, care must be taken not to harm the FHLBs. They must remain healthy, stable, and reliable sources of funding for their members. The results of the Comprehensive Review by the FHFA should not disrupt the cooperative structure, regional nature, special functions, and the unique purposes of the FHLBanks. Reasonable Rules and Implementation Customer Data Sharing (CFPB) Community banks are financially sound and take great care in protecting consumer privacy. Non-bank entities must be held responsible for ensuring the safety of the customer information they are accessing and to be able to satisfy the liability for any financial harm which they cause community banks and their consumers. Modernizing the Community Reinvestment Act (CRA) (OCC, Federal Reserve and FDIC) The modernization of the CRA must enhance the ability of community banks to serve their communities and must not impose any additional regulatory burden. All financial service providers must be subject to the CRA to provide a complete picture of every financial institutions performance in serving their communities. A modernization of the CRA that does not encompass credit unions, Farm Credit System lenders and Fintechs (including the OCCs Special Purpose National Banks) will be a sham. Safe Harbor for Banking Cannabis-Related Businesses Without taking a position on the legalization of cannabis, a safe harbor from federal sanctions for financial institutions that choose to serve legally compliant cannabis-related business in states where cannabis is legal is a matter of public safety and should be permitted. Closing the Industrial Loan Company (ILC) Regulatory Loophole ILCs represent the unacceptable mixing of banking and commerce. They pose risks to the financial system, our economy and American taxpayers. ILCs are the functional equivalent of banks and should be properly regulated. The loophole permits their holding companies from being supervised and regulated by the Federal Reserve - and must be closed. Federal Reserves Role in Payments System Improvement (FedNow Service) A fast and secure payments system is the very foundation of financial services and the economy and must be modernized. The payments system must not be monopolized by The Clearing House and its 25 large bank owners that endangered our financial system and the entire economy during the financial crisis. Community banks, small businesses and consumers must rely on the Federal Reserve to provide access to a safe and secure payments system. The Federal Reserve must be supported in its development of the FedNow Service to ensure that all participants have access to a real-time system on a fair and impartial basis. IRS Reporting Plan The various proposed IRS reporting requirements are unprecedented, misguided, raise serious concerns about government overreach, and is an invasion of their financial privacy. If implemented, they will damage the trusted and beneficial relationship between community banks and their customers. If the IRS wants to ensure greater compliance with tax laws, it can be accomplished by more appropriately using the existing tools and the wealth of information it currently possesses. (House and Senate) Legislation and Regulation - H.R. 3139 and S. 2371- ACRE Act of 2023 (Access to Credit for our Rural Economy Act) (All Sections), legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate and residences in small rural communities (House and Senate) S. 3502 and H.R. 7297 - Trigger Leads Abatement Act (All Sections) a bill 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 - Credit Card Competition Act of 2023 (All Sections) to amend the Electronic Fund Transfer Act to require the Board of Governors of the Federal Reserve System to prescribe regulations relating to network access and competition in credit card transactions (House) Letters - Comment Letter to the CFPB regarding Proposed Rule - Overdraft Lending: Very Large Financial Institutions - Docket No. CFPB-2024-0002 and RIN 3170-AA42 (CFPB) Comment Letter to the Federal Reserve - Debit Card Interchange Fees and Routing requirements - Docket No. R-1818, RIN 7100-AG67 (Federal Reserve) CBAI-led joint trades letter with the Illinois Farm Bureau, Illinois Corn Growers Association, Illinois Soybean Growers, and the Grain and Feed Association of Illinois regarding H.R. 3139 and S. 2371- The ACRE Act (Access to Credit for our Rural Economy Act) (All Sections), which is legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate (House and Senate) Action Alerts - None Miscellaneous - Residential mortgage Trigger Leads (CFPB) 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 (House and Senate, OCC, Federal Reserve and FDIC) Community Reinvestment Act (CRA), transfer of beneficial ownership reporting requirements (BOI) to FinCEN, Small Business Data Collection (Dodd-Frank Section 1071), consumer access to financial records (Dodd-Frank Section 1033), credit unions, Farm Credit System, check fraud, and financial services/banking industry consolidation (Federal Reserve)

Client expense: $65,000 · Firm income: Not reported

Government targets: Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Reserve System, HOUSE OF REPRESENTATIVES, Office of the Comptroller of the Currency (OCC), SENATE

CBAI Federal Policy Priorities - The Community Bankers Association of Illinois (CBAI) supports fair competition for financial services, tiered regulations, the separation of banking and commerce, the dual banking system/charter choice, and financial innovation; and opposes discrimination favoring certain financial service providers, banking industry consolidation, and systemic risk. Based on these guiding principles, CBAI has identified the following 2023 Federal Legislative and Regulatory Policy Priorities, which if implemented, will help community banks thrive and better serve their customers and communities. Traditional Issues, Opportunities and Concerns Additional Meaningful Regulatory Relief for Community Banks The importance of community banks cannot be overstated, and they serve their customers and communities honestly and with respect. 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. Community Bank Position on Credit Unions and Their Expanded Powers Credit unions have long since strayed from their founding purpose of serving individuals of modest means and with a common bond. They blatantly abuse their competitive advantages and are virtually indistinguishable from tax-paying community banks. Credit union acquisitions of community banks is a recent and disturbing trend that negatively impacts all taxpayers. An exit fee should be imposed on these acquisitions. This escalation of credit unions abusing of their tax-exemption should prompt Congress to act now. This abuse is an existential threat to community banks and the communities they serve. Community Bank Position on the Farm Credit System and its Expanded Powers The Farm Credit System (FCS) has long since strayed from its founding purposes, blatantly abusing its competitive advantages against community banks. The FCS is the only GSE that competes directly with community banks. This blatant and continuing discrimination against community banks must end and FCS competitive advantages must be reined-in, and the playing field leveled for community banks. Enhanced Data, Cyber and Payment Card Security (Data Security) Enhanced security standards should be enforced through a tiered system where the more restrictive rules and are imposed on the largest and most critical members of the financial system and economy where their lapses pose the greatest threat to the largest number of consumers. Core data security principals in standards enacted by legislation and regulations must include the complete cost of data breaches being borne by that party that caused the breach; all participants should be subject to verifiable Gramm-Leach-Bliley Act-like data security standards; and any new data security standard proposals should ensure that community banks are not overburdened with redundant standards. Consumer Financial Protection Bureau (CFPB) Reform and Meaningful Exemptions for Community Banks Regulations promulgated by the CFPB must provide community banks with the flexibility to meet the needs of its customers and they must not be burdened with additional and unnecessary regulatory requirements that would prevent them from serving their customers and communities. A one-size-fits-all approach to CFPB regulations harms the successful community bank business model. 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, these firm should be robustly supervised and examined; and the focus of any enhanced regulation of financial products should be on the mega banks and financial firms, the unregulated shadow financial industry and emerging Fintech companies. The CFPB has the statutory authority under the Dodd-Frank Act to exempt any class of providers [community banks] or any products or services from the rules it writes, but to-date the Bureau has been far too reticent to do so. The effective use of this authority will ensure community banks continue to be a healthy alternative to large banks and non-banks for consumers seeking to use responsible financial service providers. De Novo Community Bank Formation, the Dual Banking System and Charter Choice Newly chartered (de novo) community banks are vitally important to maintaining a strong, growing, evolving and vibrant profession in the face of banking industry consolidation. Many new banks must be chartered each year to help maintain the vitality of the community banking profession. The dual banking system, where chartering and supervision is divided between the federal government and the states, is important and must be maintained. Community banks should be able to choose the banking charter that best fits their unique business model. A banking system with multi-agency (state and federal) regulators and charter choice provides the necessary checks and balances as well as improved rulemaking on complex issues. Sound Principles for Housing Government Sponsored Entity (GSE) Reform The seemingly endless and ongoing period of government ownership and control of Fannie and Freddie must come to an end. GSE reform remains critically important to the future of the housing market and the U.S. economy. Community banks depend on the GSE for direct access to the secondary market. The GSEs must provide a steady and reliable source of funding for home mortgage lending for lenders of all sizes and through all economic cycles. This is particularly critical to maintaining liquidity when the markets are experiencing financial stress. Financial Transaction Tax Tax laws should encourage and promote robust economic activity and a thriving community banking sector, not impose new bank-specific fees, punitive new levies, transaction taxes, limitations on the deductibility of expenses, revenue offsets or pay-fors that target the banking industry. Rather, there should be parity among all financial service providers; there should be tax incentives for community banks serving low- and moderate-income individuals, small businesses, and small farms; and there should be a tax credit equivalent to the cost of community bank compliance with BSA compliance. Responsible Bank Merger Activity New bank merger legislation or regulation should not apply to community banks. Rather, policymakers should seriously consider the impact on our financial system, economy, and American taxpayers by allowing the nations mega banks, which are too big and unable to fail, to become even larger and more interconnected. Current Issues, Opportunities and Concerns Bank Regulators Involvement in Resolving Reimbursement for Fraudulently Altered Returned Checks CBAIs member community banks have been experiencing a pernicious and growing problem with reimbursements for fraudulently altered checks drawn on their customers accounts. The problem can be accurately summarized as being caused by the nations largest banks and credit union, where these checks were deposited in fraudulent accounts, which is harming community banks and their customers, in addition to undermining the publics confidence in the nations banking and financial system. CBAI has urged the regulators to get involved and address this problem. Finally Address the Risks of Too-Big-To-Fail (and now Too-Big-To-Not-Completely-Insure) Banks and Financial Firms to Protect Our Financial System, the Economy, and American Taxpayers from Future Bailouts TBTF The financial crisis, taxpayer bailouts, and subsequent recession was caused by the misconduct of the nations largest banks and financial firms. These megabanks have proven, at great cost to American taxpayers, that they cannot be effectively managed, supervised or disciplined. They are clearly too-big-to-change, too-big-to-fail and must be downsized. TBTNCI The recent failures of two large banks in early 2023, and the FDIC insuring 100% of their uninsured deposits, have raised new concerns about deposit insurance and have prompted calls for broader FDIC reforms. If systemically important financial institutions (SIFIs) cause losses to the Deposit Insurance Fund (DIF) then SIFIs should be responsible for reimbursing the DIF for those losses. Legitimate Bank Service Charges and Fees are not Exploitive and Junk Fees CBAI does not support overdraft policies and practices that abuse consumers. Policymakers must accept that it is the consumers responsibility to always know their account balance and not write checks or initiate debit transactions that would overdraw their account. The cost for processing overdrafts may include returning the item or paying the overdraft which creates the equivalent of an unauthorized, unsecured, and interest-free loan. Effectively managing risks associated with overdrafts is a safety and soundness regulatory requirement. Realistic Perspective on Financial Inclusion CBAI supports government initiatives that educate consumers and encourage financial inclusion, but it is not the proper role of government to provide banking services direct to individuals either through the Federal Reserve, state-owned public banks, or the U.S. Postal Service. Providing banking services to individuals and businesses is the proper role of the private-sector banking system. Government can assist the private sector in financial inclusion efforts especially to low- and middle-income consumers, which are those most likely to be un- or underbanked. 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, where SBA does not compete with banks in lending to small businesses. Direct SBA lending would violate this tradition. Community banks are far superior in establishing and prudently underwriting commercial lending relationships. The SBA originating and disbursing 7(a) loans will put billions of taxpayer dollars at risk of loss. Postal Banking Postal banking is misguided and any entry of the USPS (Postal Service) into banking services is a significant government-sponsored, competitive threat to the viability of tax-paying community banks. Public Banking Public banking (i.e., publicly owned banks) is misguided and is a significant government-sponsored, competitive threat to the viability of tax-paying community banks. Responsible Regulation of Digital Assets - Cryptocurrency, Central Bank Digital Currency (CBDC), and Stablecoins The risks posed by digital assets are enormous, as well as the consequences for monetary policy, our financial system, and the banking industry (i.e., disintermediation.). They also pose threats to the privacy and security of consumers and small businesses. Of great concern is that 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 cooperate and collaborate in the development and implementation of a comprehensive approach to ensure a consistent Federal regulatory framework that does not permit digital assets to threaten the essential and highly successful business model of regulated and responsible community banks. Federal Home Loan Banks in their Comprehensive Review Most community banks are members and shareholders of their regional Federal Home Loan Bank (FHLB). The FHLBs provide short-term liquidity, long-term funding, mortgage-related products, and other financial services in order to help their members provide affordable credit to the local communities they serve. The regional structure, special functions, and unique purpose of the FHLBs must be recognized and maintained by the Federal Housing Finance Agency (FHFA). As the Administration and Congress consider reforming the housing finance system, care must be taken not to harm the FHLBs. They must remain healthy, stable, and reliable sources of funding for their members. The results of the Comprehensive Review by the FHFA should not disrupt the cooperative structure, regional nature, special functions, and the unique purposes of the FHLBanks. Reasonable Rules and Implementation Small Business Data Collection (CFPB) Small business lending data clearly suggests fair lending is not a problem at community banks as they treat their customers honestly and fairly. The regulatory burden of these collection and reporting requirements falls disproportionately hard on community banks, and community banks should be provided with meaningful exemptions in this rulemaking. Customer Data Sharing (CFPB) Community banks are financially sound and take great care in protecting consumer privacy. Non-bank entities must be held responsible for ensuring the safety of the customer information they are accessing and to be able to satisfy the liability for any financial harm which they cause community banks and their consumers. Modernizing the Community Reinvestment Act (CRA) (OCC, Federal Reserve and FDIC) The modernization of the CRA must enhance the ability of community banks to serve their communities and must not impose any additional regulatory burden. All financial service providers must be subject to the CRA to provide a complete picture of every financial institutions performance in serving their communities. A modernization of the CRA that does not encompass credit unions, Farm Credit System lenders and Fintechs (including the OCCs Special Purpose National Banks) will be a sham. Reporting Beneficial Ownership Information (FinCEN) Provisions in the NDAA in the 116th Congress shifted the burden of collecting and reporting beneficial ownership to FinCEN. This transfer must be accomplished completely and expeditiously. Safe Harbor for Banking Cannabis-Related Businesses Without taking a position on the legalization of cannabis, a safe harbor from federal sanctions for financial institutions that choose to serve legally compliant cannabis-related business in states where cannabis is legal is a matter of public safety and should be permitted. Closing the Industrial Loan Company (ILC) Regulatory Loophole ILCs represent the unacceptable mixing of banking and commerce. They pose risks to the financial system, our economy and American taxpayers. ILCs are the functional equivalent of banks and should be properly regulated. The loophole permits their holding companies from being supervised and regulated by the Federal Reserve - and must be closed. Agriculture and Rural America A vibrant rural economy is vital to Americas prosperity. The multi-year Farm Bill provided a strong safety net for farmers and ranchers including adequate price-protection programs and enhanced USDA-guaranteed farm and business loan programs. These programs must be protected from cuts or any adverse changes that would discourage farmer and rancher participation or undermine private-sector delivery. Federal Reserves Role in Payments System Improvement (FedNow Service) A fast and secure payments system is the very foundation of financial services and the economy and must be modernized. The payments system must not be monopolized by The Clearing House and its 25 large bank owners that endangered our financial system and the entire economy during the financial crisis. Community banks, small businesses and consumers must rely on the Federal Reserve to provide access to a safe and secure payments system. The Federal Reserve must be supported in its development of the FedNow Service to ensure that all participants have access to a real-time system on a fair and impartial basis. Appropriate Regulations of Fintechs and Innovation in Financial Services Financial innovation presents community banks with challenges and opportunities which they are rising to meet. Policymakers should reasonably assist community banks to prepare for this new and evolving era, not pose any unreasonable requirements, and not give fintechs any competitive advantages over community banks by subjecting them to lesser regulatory requirements. IRS Reporting Plan The various proposed IRS reporting requirements are unprecedented, misguided, raise serious concerns about government overreach, and is an invasion of their financial privacy. If implemented, they will damage the trusted and beneficial relationship between community banks and their customers. If the IRS wants to ensure greater compliance with tax laws, it can be accomplished by more appropriately using the existing tools and the wealth of information it currently possesses. Harmful Climate Risk Regulations CBAI opposes any climate change regulations that will adversely impact community banks and their ability to support their customers and communities including setting hard lending concentration limits on lending to fossil fuel or other carbon-intensive industries, stress testing or scenario analysis based on adverse climate change assumptions, and capital requirements based on climate risks. Community bankers high-contact and relationship-based lending model together with the soon-to-be-implemented Current Expected Credit Loss model, will incorporate material risk assumptions in estimating loan losses - including climate risks. Additional separate climate risk stress testing, concentration limits, and capital requirements for community banks are duplicative and unnecessary. (House and Senate) Legislation and Regulation - H.R. 3139 and S. 2371- ACRE Act of 2023 (Access to Credit for our Rural Economy Act) (All Sections), legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate and residences in small rural communities (House and Senate) S. 3502 and H.R. 7297 - Trigger Leads Abatement Act (All Sections) a bill 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. 3638 - Close the Shadow Banking Loophole Act (All Sections) to prevent large companies from gaining access to the federal safety net and escaping federal oversight and supervision by the Federal Reserve (House and Senate) S. 1838 - Credit Card Competition Act of 2023 (All Sections) to amend the Electronic Fund Transfer Act to require the Board of Governors of the Federal Reserve System to prescribe regulations relating to network access and competition in credit card transactions (House) S.J.Res 32 - Joint Resolution nullifying the CFPBs Section 1071 - Small Business Data Collection Rule (House) S. 2860 - SAFER Banking Act (All Sections) to provide protections for federally regulated financial institutions that serve state-sanctioned marijuana businesses (House and Senate) Farm Bill - The Passage of a five-year Farm Bill with community bank priorities and without FCS expansion including higher limits on USDA guaranteed farm loans, quicker turnaround time for USDA Express loan approvals, and without and expansion of the Farm Credit System or their exemption from Dodd-Frank Section 1071 (House and Senate) Letters - Comment Letter to the CFPB regarding Proposed Rule - Overdraft Lending: Very Large Financial Institutions - Docket No. CFPB-2024-0002 and RIN 3170-AA42 (CFPB) Comment Letter to the OCC, Federal Reserve and FDIC - Regulatory Publication and Review Under Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), Docket ID OCC-2023-0016, Federal Reserve Board Docket No. OP-1828, and FDIC - EGRPRA - specifically, tiered and appropriate regulations for community banks, closing the Industrial Loan Company loophole, favorable climate for de novo community bank formation (OCC, Federal Reserve and FDIC) Comment Letter to the Federal Reserve - Debit Card Interchange Fees and Routing requirements - Docket No. R-1818, RIN 7100-AG67 (Federal Reserve) CBAI-led joint trades letter with the Illinois Farm Bureau, Illinois Corn Growers Association, Illinois Soybean Growers, and the Grain and Feed Association of Illinois regarding H.R. 3139 and S. 2371- The ACRE Act (Access to Credit for our Rural Economy Act) (All Sections), which is legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate (House and Senate) Action Alerts - Action Alert - Urge Congress to Pass Farm Bill with community bank priorities and without FCS expansion including higher limits on USDA guaranteed farm loans, quicker turnaround time for USDA Express loan approvals, and without and expansion of the Farm Credit System or their exemption from Dodd-Frank Section 1071 (House) Miscellaneous - Residential mortgage Trigger Leads (CFPB) 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 (House and Senate, OCC, Federal Reserve and FDIC) Federal Reserve balance sheet (Federal Reserve) Resignation of FDIC Chairman Martin Gruenberg (House) Stopping bank regulatory overreach (House, Senate and Federal Reserve) Community Reinvestment Act (CRA), transfer of beneficial ownership reporting requirements (BOI) to FinCEN, Small Business Data Collection (Dodd-Frank Section 1071), consumer access to financial records (Dodd-Frank Section 1033), credit unions, Farm Credit System, check fraud, and financial services/banking industry consolidation (Federal Reserve) Too-big-to-fail and stronger capital requirements for the largest banks (House)

Client expense: $65,000 · Firm income: Not reported

Government targets: Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Reserve System, HOUSE OF REPRESENTATIVES, Office of the Comptroller of the Currency (OCC), SENATE

CBAI Federal Policy Priorities - The Community Bankers Association of Illinois (CBAI) supports fair competition for financial services, tiered regulations, the separation of banking and commerce, the dual banking system/charter choice, and financial innovation; and opposes discrimination favoring certain financial service providers, banking industry consolidation, and systemic risk. Based on these guiding principles, CBAI has identified the following 2023 Federal Legislative and Regulatory Policy Priorities, which if implemented, will help community banks thrive and better serve their customers and communities. Traditional Issues, Opportunities and Concerns Additional Meaningful Regulatory Relief for Community Banks The importance of community banks cannot be overstated, and they serve their customers and communities honestly and with respect. 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. Community Bank Position on Credit Unions and Their Expanded Powers Credit unions have long since strayed from their founding purpose of serving individuals of modest means and with a common bond. They blatantly abuse their competitive advantages and are virtually indistinguishable from tax-paying community banks. Credit union acquisitions of community banks is a recent and disturbing trend that negatively impacts all taxpayers. An exit fee should be imposed on these acquisitions. This escalation of credit unions abusing of their tax-exemption should prompt Congress to act now. This abuse is an existential threat to community banks and the communities they serve. Community Bank Position on the Farm Credit System and its Expanded Powers The Farm Credit System (FCS) has long since strayed from its founding purposes, blatantly abusing its competitive advantages against community banks. The FCS is the only GSE that competes directly with community banks. This blatant and continuing discrimination against community banks must end and FCS competitive advantages must be reined-in, and the playing field leveled for community banks. Enhanced Data, Cyber and Payment Card Security (Data Security) Enhanced security standards should be enforced through a tiered system where the more restrictive rules and are imposed on the largest and most critical members of the financial system and economy where their lapses pose the greatest threat to the largest number of consumers. Core data security principals in standards enacted by legislation and regulations must include the complete cost of data breaches being borne by that party that caused the breach; all participants should be subject to verifiable Gramm-Leach-Bliley Act-like data security standards; and any new data security standard proposals should ensure that community banks are not overburdened with redundant standards. Sound Principles for Housing Government Sponsored Entity (GSE) Reform The seemingly endless and ongoing period of government ownership and control of Fannie and Freddie must come to an end. GSE reform remains critically important to the future of the housing market and the U.S. economy. Community banks depend on the GSE for direct access to the secondary market. The GSEs must provide a steady and reliable source of funding for home mortgage lending for lenders of all sizes and through all economic cycles. This is particularly critical to maintaining liquidity when the markets are experiencing financial stress. Financial Transaction Tax Tax laws should encourage and promote robust economic activity and a thriving community banking sector, not impose new bank-specific fees, punitive new levies, transaction taxes, limitations on the deductibility of expenses, revenue offsets or pay-fors that target the banking industry. Rather, there should be parity among all financial service providers; there should be tax incentives for community banks serving low- and moderate-income individuals, small businesses, and small farms; and there should be a tax credit equivalent to the cost of community bank compliance with BSA compliance. Current Issues, Opportunities and Concerns Bank Regulators Involvement in Resolving Reimbursement for Fraudulently Altered Returned Checks CBAIs member community banks have been experiencing a pernicious and growing problem with reimbursements for fraudulently altered checks drawn on their customers accounts. The problem can be accurately summarized as being caused by the nations largest banks and credit union, where these checks were deposited in fraudulent accounts, which is harming community banks and their customers, in addition to undermining the publics confidence in the nations banking and financial system. CBAI has urged the regulators to get involved and address this problem. Finally Address the Risks of Too-Big-To-Fail (and now Too-Big-To-Not-Completely-Insure) Banks and Financial Firms to Protect Our Financial System, the Economy, and American Taxpayers from Future Bailouts TBTF The financial crisis, taxpayer bailouts, and subsequent recession was caused by the misconduct of the nations largest banks and financial firms. These megabanks have proven, at great cost to American taxpayers, that they cannot be effectively managed, supervised or disciplined. They are clearly too-big-to-change, too-big-to-fail and must be downsized. TBTNCI The recent failures of two large banks in early 2023, and the FDIC insuring 100% of their uninsured deposits, have raised new concerns about deposit insurance and have prompted calls for broader FDIC reforms. If systemically important financial institutions (SIFIs) cause losses to the Deposit Insurance Fund (DIF) then SIFIs should be responsible for reimbursing the DIF for those losses. Responsible Regulation of Digital Assets - Cryptocurrency, Central Bank Digital Currency (CBDC), and Stablecoins The risks posed by digital assets are enormous, as well as the consequences for monetary policy, our financial system, and the banking industry (i.e., disintermediation.). They also pose threats to the privacy and security of consumers and small businesses. Of great concern is that 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 cooperate and collaborate in the development and implementation of a comprehensive approach to ensure a consistent Federal regulatory framework that does not permit digital assets to threaten the essential and highly successful business model of regulated and responsible community banks. Federal Home Loan Banks in their Comprehensive Review Most community banks are members and shareholders of their regional Federal Home Loan Bank (FHLB). The FHLBs provide short-term liquidity, long-term funding, mortgage-related products, and other financial services in order to help their members provide affordable credit to the local communities they serve. The regional structure, special functions, and unique purpose of the FHLBs must be recognized and maintained by the Federal Housing Finance Agency (FHFA). As the Administration and Congress consider reforming the housing finance system, care must be taken not to harm the FHLBs. They must remain healthy, stable, and reliable sources of funding for their members. The results of the Comprehensive Review by the FHFA should not disrupt the cooperative structure, regional nature, special functions, and the unique purposes of the FHLBanks. Reasonable Rules and Implementation Small Business Data Collection (CFPB) Small business lending data clearly suggests fair lending is not a problem at community banks as they treat their customers honestly and fairly. The regulatory burden of these collection and reporting requirements falls disproportionately hard on community banks, and community banks should be provided with meaningful exemptions in this rulemaking. Customer Data Sharing (CFPB) Community banks are financially sound and take great care in protecting consumer privacy. Non-bank entities must be held responsible for ensuring the safety of the customer information they are accessing and to be able to satisfy the liability for any financial harm which they cause community banks and their consumers. Modernizing the Community Reinvestment Act (CRA) (OCC, Federal Reserve and FDIC) The modernization of the CRA must enhance the ability of community banks to serve their communities and must not impose any additional regulatory burden. All financial service providers must be subject to the CRA to provide a complete picture of every financial institutions performance in serving their communities. A modernization of the CRA that does not encompass credit unions, Farm Credit System lenders and Fintechs (including the OCCs Special Purpose National Banks) will be a sham. Reporting Beneficial Ownership Information (FinCEN) Provisions in the NDAA in the 116th Congress shifted the burden of collecting and reporting beneficial ownership to FinCEN. This transfer must be accomplished completely and expeditiously. Safe Harbor for Banking Cannabis-Related Businesses Without taking a position on the legalization of cannabis, a safe harbor from federal sanctions for financial institutions that choose to serve legally compliant cannabis-related business in states where cannabis is legal is a matter of public safety and should be permitted. Agriculture and Rural America A vibrant rural economy is vital to Americas prosperity. The multi-year Farm Bill provided a strong safety net for farmers and ranchers including adequate price-protection programs and enhanced USDA-guaranteed farm and business loan programs. These programs must be protected from cuts or any adverse changes that would discourage farmer and rancher participation or undermine private-sector delivery. Federal Reserves Role in Payments System Improvement (FedNow Service) A fast and secure payments system is the very foundation of financial services and the economy and must be modernized. The payments system must not be monopolized by The Clearing House and its 25 large bank owners that endangered our financial system and the entire economy during the financial crisis. Community banks, small businesses and consumers must rely on the Federal Reserve to provide access to a safe and secure payments system. The Federal Reserve must be supported in its development of the FedNow Service to ensure that all participants have access to a real-time system on a fair and impartial basis. IRS Reporting Plan The various proposed IRS reporting requirements are unprecedented, misguided, raise serious concerns about government overreach, and is an invasion of their financial privacy. If implemented, they will damage the trusted and beneficial relationship between community banks and their customers. If the IRS wants to ensure greater compliance with tax laws, it can be accomplished by more appropriately using the existing tools and the wealth of information it currently possesses. Harmful Climate Risk Regulations CBAI opposes any climate change regulations that will adversely impact community banks and their ability to support their customers and communities including setting hard lending concentration limits on lending to fossil fuel or other carbon-intensive industries, stress testing or scenario analysis based on adverse climate change assumptions, and capital requirements based on climate risks. Community bankers high-contact and relationship-based lending model together with the soon-to-be-implemented Current Expected Credit Loss model, will incorporate material risk assumptions in estimating loan losses - including climate risks. Additional separate climate risk stress testing, concentration limits, and capital requirements for community banks are duplicative and unnecessary. (House and Senate) Legislation and Regulation - H.R. 3139 and S. 2371- ACRE Act of 2023 (Access to Credit for our Rural Economy Act) (All Sections), legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate and residences in small rural communities (House and Senate) S. 3502 and H.R. 7297 - Trigger Leads Abatement Act (All Sections) a bill 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.J.Res 32 - Joint Resolution nullifying the CFPBs Section 1071 - Small Business Data Collection Rule (House) S. 2860 - SAFER Banking Act (All Sections) to provide protections for federally regulated financial institutions that serve state-sanctioned marijuana businesses (House and Senate) Farm Bill - The Passage of a five-year Farm Bill with community bank priorities and without FCS expansion including higher limits on USDA guaranteed farm loans, quicker turnaround time for USDA Express loan approvals, and without and expansion of the Farm Credit System or their exemption from Dodd-Frank Section 1071 (House and Senate) Letters - CBAI-led joint trades letter with the Illinois Farm Bureau, Illinois Corn Growers Association, Illinois Soybean Growers, and the Grain and Feed Association of Illinois regarding H.R. 3139 and S. 2371- The ACRE Act (Access to Credit for our Rural Economy Act) (All Sections), which is legislation that will exclude from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate (House and Senate) Action Alerts - Action Alert - Urge Congress to Pass Farm Bill with community bank priorities and without FCS expansion including higher limits on USDA guaranteed farm loans, quicker turnaround time for USDA Express loan approvals, and without and expansion of the Farm Credit System or their exemption from Dodd-Frank Section 1071 (House) Miscellaneous - Residential mortgage Trigger Leads (CFPB) 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 (House and Senate, OCC, Federal Reserve and FDIC) Community Reinvestment Act (CRA), transfer of beneficial ownership reporting requirements (BOI) to FinCEN, Small Business Data Collection (Dodd-Frank Section 1071), consumer access to financial records (Dodd-Frank Section 1033), credit unions, Farm Credit System, check fraud, and financial services/banking industry consolidation (Federal Reserve)

Client expense: $65,000 · Firm income: Not reported

Government targets: Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Reserve System, HOUSE OF REPRESENTATIVES, Office of the Comptroller of the Currency (OCC), SENATE

HR 541: Beginning Agriculturist Lifetime Employment Act of 2023 (BALE Act of 2023) Agriculture Inclusiveness Agriculture Appropriations Community Facilities legislation and H.R. 4736 Investing in Rural America Act HR 3139, ACRE Act Climate/Food and Agriculture Climate Alliance (FACA) Farm Bill Renewable Energy Rural Business Investment Company (RBIC) Program Legislation S. 1756 / HR 4940 Fishing Industry Credit Enhancement Act Crop Insurance Foreign Ownership Rural Housing Issues Agriculture Exports S. 2890 / HR 5631 Producer and Agricultural Credit Enhancement Act HR 3904 Crop Insurance for Future Farmers Act NASS Modernization Legislation USDA Express Loan Program Act

Client expense: $70,000 · Firm income: Not reported

Government targets: Agriculture, Dept of (USDA), Farm Credit Administration, HOUSE OF REPRESENTATIVES, SENATE

H.R. 1996 SAFE Banking Act (2021-2022); S.2860 SAFER Banking Act (2023) federal legislation to permit providing banking services to legitimate cannabis businesses. H.R. 3139 - ACRE Act of 2023 Agricultural banking issues; Section 1071 Dodd Frank Wall Street Reform and Consumer Protection Act, requiring gathering and reporting of demographic information by lenders; Corporate Transparency Act regulatory proposal addressing beneficial ownership reporting requirements; FHFA November, 2023 Report on the Federal Home Loan Bank System; Federal Tax Exemption for Credit Unions; Credit Card Competition Act, S.1838/HR3881

Client expense: $60,000 · Firm income: Not reported

Government targets: Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA), Federal Reserve System, HOUSE OF REPRESENTATIVES, Housing & Urban Development, Dept of (HUD), Internal Revenue Service (IRS), Labor, Dept of (DOL), Office of the Comptroller of the Currency (OCC), SENATE, Securities & Exchange Commission (SEC), Small Business Administration (SBA)

H.R. 3139, ACRE Act of 2023, provisions related to agricultural real estate financing.

Client expense: $360,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

Issues pertaining to farm finances and H.R. 3139, S.2371 ACRE Act.

Client expense: Not reported · Firm income: $50,000

Government targets: HOUSE OF REPRESENTATIVES, SENATE

Farm Credit System H.R. 3139 & S.2371, Access to Credit for our Rural Economy (ACRE) Act of 2023 2023-2024 Farm Bill

Client expense: $1,750,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

H.R.2423 - Farm Credit Administration Independent Authority Act Access to Credit for our Rural Economy Act of 2023 (H.R.3139/S.2371)

Client expense: $200,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

H.R. 1392 NFIP Extension Act H.R. 3139, ACRE H.R. 7297, Homebuyers Privacy Protection Act S. 2142 NFIP Reauthorization and Reform Act S. 2371, ACRE S.2968, A bill to reauthorize the National Flood Insurance Program. S. 3068, VA Home Loan Awareness Act S. 3502, Homebuyers Privacy Protection Act S. 3902, Appraisal Industry Improvement Act Capital Requirements and FHLB Advances Credit Score Models implementation FHFA FHLB System Review FHLB Reform GSEs: Reform, Recapitalization, PSPA Amendments, Climate Change Government Sponsored Enterprises Reform and Recapitalization Housing Finance Reform National Flood Insurance Reauthorization TILA-RESPA Integrated Disclosures Trigger Leads

Client expense: $760,000 · Firm income: Not reported

Government targets: Federal Housing Finance Agency (FHFA), HOUSE OF REPRESENTATIVES, SENATE

H.R. 3139 ACRE Act H.R. 3787 Modernizing Agricultural and Manufacturing Bonds Act H.R. 4673 Financial Innovation and Technology for the 21st Century Act H.R. 5877 USDA Express Loan Act H.R. 7338, Rural Credit Access Act S. 2252 Promoting New and Diverse Depositories Act S. 2371 ACRE Act S. 2723 Modernizing Agricultural and Manufacturing Bonds Act 2023 Farm Bill Reauthorization Adequate Farm Bill Spending Crop Insurance Cryptocurrency Regulation Digital Assets Regulation Durbin Amendment on Debit Card Routing; Extension to Credit Cards Farm Credit System Expansion Guaranteed Farm Loans Sec. 1071 of the Dodd Frank Act

Client expense: $760,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

H.R. 3139 ACRE Act H.R. 3335, the IRS eIVES Modernization and Anti-Fraud Act of 2023) H.R. 4055, the Opportunity Zones Enhancement Act of 2023 H.R. 4721 Main Street Tax Certainty Act S. 1706 Main Street Tax Certainty Act S. 2371 ACRE Act

Client expense: $760,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES, SENATE

Support for H.R. 3139 - The ACRE Act.

Client expense: $20,000 · Firm income: Not reported

Government targets: HOUSE OF REPRESENTATIVES