May 16, 2011

House Bill Would Provide Relief to Community Banks

Blaine Luetkemeyer (R-Mo.) introduced bill H.R. 1697: Communities First Act to the House of Representatives on May 3, 2011. The bill is aimed at assisting community banks in raising capital and increasing lending to small businesses.
The bill’s primary objectives are:

    • Exempt community banks with total consolidated assets of $1 billion or less from the management assessment of internal controls requirement of Sarbanes-Oxley.
    • Allow community banks to amortize losses on impaired loans secured by real estate and certain foreclosed assets over a period of 10 years (quarterly straight-line basis) for regulatory capital purposes.
    • Allow a depository institution to average, over a five-year period, the appraised value of any real estate securing a loan held by the institution.
    • Remove the requirement of an annual privacy notice under Gramm-Leach-Bliley if the bank’s privacy requirements have not changed from the last such disclosure.
    • Remove the requirement of a privacy notice under Gramm-Leach-Bliley entirely if a bank is licensed by a state and is subject to State laws regarding disclosure of nonpublic personal information.
    • Mandate that the Securities and Exchange Commission (SEC) perform a cost-benefit analysis to determine that it would not be detrimental to community banks before enacting any proposed accounting change.
    • Increase the threshold of shareholders from 500 to 2,000 that would require a bank to register with the SEC.
    • Allow qualifying banks to be treated as a partnership for tax purposes.
    • Grant the Financial Stability Oversight Council the power to veto the Consumer Financial Protection Bureau if the latter were to enact a rule that would have a detrimental effect on a subset of the financial services industry.
    • Amend the Wall Street Reform Act so banks can continue to utilize third-party credit ratings.
    • Extend the five-year net operating loss carryback provision.
    • Enact a limited tax credit to assist community banks in improving credit.

If you have questions on the impact of this proposed legislation, please contact the experts listed below at (800) 270-9629. To receive banking updates from PYA on Twitter, click here.

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