= Members Only Content
2012 Government Relations Action Priorities
Adopted by ABA Board of Directors, December 7, 2011
|
Additional Resources |
The following priorities reflect the diverse and forward-looking agenda of the American Bankers Association. Our member banks pursue progressive, entrepreneurial and service-oriented strategies to provide financial services to benefit their customers and communities. These policies are designed to help bankers achieve their goals by maximizing the operating flexibility and business options available to them while reducing federal regulatory burdens.
Special Emphasis for 2012: Resolving the Regulatory Crisis: Letting Banks Get on with Business.
Calming the Regulatory Waters
We will call upon Congress and the members of the Financial Stability Oversight Council (FSOC) to reconsider the unprecedented scale and scope of new banking regulations that are feeding the current regulatory crisis. ABA will work to reduce the waves of new regulatory mandates that are overwhelming the banking industry and impeding the ability of banks to serve their customers and communities. Some regulatory projects need to be supported, some need to be cut back to their essentials, some need to be reversed, others need to be abandoned, many should be delayed and rethought, all need to be better coordinated.
Supporting Knowledgeable and Experienced Leadership
While ABA as a general practice does not formally endorse or oppose specific presidential nominees, ABA will encourage the appointment to leadership positions in the banking regulatory agencies of people with strong knowledge of and experience with the banking industry, who understand the importance and role of banking in the economy, and who will be advocates for a prosperous and robust banking system.
Ensuring that "Reform" Makes Things Better for the Economy, Consumers, and Small Business
Implementation of the Dodd-Frank Act (DFA) will be a daunting task. Experience teaches that implementation of the new law will reveal the need for changes in the law and regulations, large and small. ABA will take an active part in all aspects of implementation and continual improvement of our regulatory system and programs. Our guiding standard will be what will act to enhance the ability of banks to serve our customers, both in the near term and in the long run. We will seek to change anything in the law and regulations that impedes our ability to serve our customers, and we will advocate anything that will work to strengthen that ability. Mistakes will need to be corrected promptly, problems addressed directly, and good and wise policies defended clearly.
Keeping the Focus on Customers
ABA will advocate for reforms to the new Bureau of Consumer Financial Protection to ensure that it stays focused on improving the consumer experience rather than on building a bureaucracy. We will support measures to require accountability for the Bureau and its staff. Reforms would include governance of the Bureau by a board or commission, making FSOC review of Bureau actions workable, and increasing the involvement of safety and soundness regulators in Bureau rulemaking. We will seek to amend authorities that are vulnerable to regulatory whim. We will encourage development of a strong supervisory program that effectively applies consumer standards comparably to all services providers, banks and non-banks alike. We will work with the Bureau to ensure that its rules and actions are based on good information and data and real experience rather than conjecture or hypothesis, and subject to rigorous cost-benefit analysis.
Examining Banks in a More Balanced Way
We will seek to restore bank examinations to a program that works to make banks better rather than exposes them to a "gotcha" enforcement exercise. Examinations should be a process that identifies genuine safety and soundness or compliance problems early, recommends effective corrective actions, and develops and promotes improved practices. We will encourage better training and stronger career paths for examiners resulting in an examination force with a full range of expertise levels, better retention of experienced examiners, and effective appeals processes that can address examiner errors and excesses in a timely way. We will also support the dedication of adequate support at the state level for a quality examination program. We will promote use of a banker-run post-examination survey program that allows the identification of examination trends, based upon real data, and use that information to bring problems to the attention of regulators and Congress for effective redress. As provisions of the Dodd-Frank Act are implemented, examiners need to be cognizant of and take into account the overwhelming challenge for banks and regulators to comply with the wave of new mandates, keeping in mind the limitations on resources available to address the new regulatory demands.
Creating a Calibrated, Better Fit, Supervisory Program
A one-size-fits-all regulatory program does not work well with our diverse banking industry, and two sizes do not fit much better. We will encourage development and application of a supervisory program that is based upon common principles and objectives but which is adjusted and calibrated in application to take into account relevant differences in size, charter, geography, and business models within the industry. Proposed and existing regulations should be subject to rigorous and verifiable cost-benefit analyses, including the impact on customers and communities, and adjusted accordingly.
Re-emphasizing the "E" in CAMELS
We will seek to restore balance to regulatory policies that have heavily weighted capital and deemphasized the importance of earnings. ABA will work to remind policymakers of the importance of diversified bank earnings as a key to bank stability and resilience, and to avoid regulatory and examination practices that have an intensely procyclical impact on our banks and on our customers. Overly aggressive write down of assets discourages lending and weakens bank conditions. We will defend income from interchange, overdraft programs, and other services that allow us to provide the services that our customers want and rely on. We will seek to ensure that policymakers consider the impact on bank earnings of new regulatory and legislative proposals.
Delivering Banks from the Problem Bank List
With the steady decline in bank failures we will encourage the FDIC to turn its main attention to helping banks leave the problem bank list and become once again healthy participants in the economic growth of their communities.
Related 2012 Action Priorities
Appropriate Accounting and Reporting
ABA will oppose the plans of the Financial Accounting Standards Board (FASB) to impose more comprehensive mark-to-market accounting on bank financials. ABA will continue to be a leader in advocating a system for valuing bank assets that is based upon the economic use of the asset rather than liquidation estimates of value. Part of this advocacy will also include improvements to accounting for loan and lease losses, which is being examined globally. ABA will also encourage improved transparency and accountability in FASB's and the International Accounting Standards Board's standard setting processes, ensuring that the interests of the users of financial statements—including businesses and investors—are taken into account. In that regard, we believe that systemic implications of accounting standards, both U.S. and international standards, should be subject to monitoring by the FSOC, and we will encourage the FSOC to do so when appropriate. With regard to the Internal Revenue Service, ABA will work to reduce the burdens of any new information reporting requirements relating to customer accounts.
Ending Too Big to Fail
One of the central purposes of the Dodd-Frank Act was to end the too-big-to-fail doctrine, which unfortunately was not accomplished by the enacted legislation. We will work to see that the new tools and programs provided under DFA are used to end too-big-to-fail insofar as they can, leading to the orderly resolution of failing financial institutions. The existence of too-big-to-fail policies is expensive to the economy and to the government. It unfairly benefits large institutions over smaller ones and encourages miscalculation of risks. It distorts investment, causing investors to misprice risk, and mutes market discipline. While the too-big-to-fail doctrine is perceived to exist, systemic risks will build up. We will also oppose proposals that would in effect have the banking industry shoulder the cost burden of resolution of failing non-bank firms.
Charter Choice, Dual Banking, and Business Flexibility
ABA will oppose efforts that reduce the ability of institutions to choose their form of organization or charter or that limit institutions' business flexibility, consistent with appropriate standards of prudential supervision. In light of the consolidation of OCC and OTS under the Dodd-Frank Act, we will work to ensure that regulators are especially careful to preserve the vitality of the thrift charter, including the mutual charter. ABA also believes that banks and holding companies should be permitted to evolve in ways that continue to meet the needs of their customers. That includes the importance of comparable and consistent regulatory impact across different charters.
Mutual Institution Charter. ABA firmly supports the continued availability and vitality of the mutual form of organization for depository institutions. ABA enthusiastically supports the ability of mutually chartered institutions to grow, serve their communities, and actively compete in the financial services marketplace. The preservation of mutuality is one of ABA's fundamental government relations priorities.
Dual Banking System. For nearly 150 years the dual banking system has been a source of innovation and strength for the banking system and the communities and customers we serve. ABA will oppose efforts to undermine the dual banking system. ABA will support efforts to strengthen the program of national standards for national banks and federal savings associations and will also oppose efforts to concentrate and centralize banking supervision at the national level, since strong national standards for federal charters and effective regulatory programs for state charters are two essential and mutually-reinforcing elements of the dual banking system.
Payments System Issues
ABA will actively support policies that allow banks to sustain their leadership in the integrity and versatility of the payments system to meet customer needs and preferences efficiently and safely, and we will work to change policies and proposals that would cause banks to miss innovation opportunities important to the service of our customers or that would result in barriers to banks competing in evolving payment systems technologies. That includes use of credit and debit cards, as well as prepaid cards and other payments services improvements and innovations. We will emphasize the ineffectiveness and costs of using the payments system as a policing tool, such as to enforce Internet gambling restrictions. We will encourage the setting and continuous upgrade, joined with effective enforcement, of uniform standards for all significant providers of payments services (with the banking industry and other significant players having a seat at the table to develop adequate standards), designed to protect the integrity of the payments system, including appropriate assigning of liability for data breaches resulting from failure to follow standards for protecting payments data. Retailers should pay their fair share in fraud prevention efforts as well as for addressing harmful lapses in data security.
Strong, Adequately Funded Deposit Insurance Program
ABA will wholly support maintaining the strength of the DIF. Programs to rebuild DIF ratios should take full advantage of the letter and intent of the law to minimize any procyclical effects, relying upon a program of steady premiums that precludes spikes in rates (especially when the economy is under stress), avoiding excess payments into the Fund and accelerating reimbursements to banks of excess prepaid premiums. We will take an active role in updating the definition of core deposits, focusing on the "stickiness" of deposits in time of stress, including appropriate treatment of reciprocal programs (such as CDARS) as core deposits. We believe that deposit insurance premiums should be closely tied to the evaluation of an individual institution's risk to the DIF and not be used to affect other bank activities not closely tied to risk of loss to the Fund. Unfortunately, the existing FDIC risk-based-premium model has become too complicated and unpredictable, fueling unfair anomalies in practice. The model needs to be simplified, and the cliff effects of the large bank pricing model should be eliminated by applying the same smaller bank assessment standards to the first $10 billion of the assessment base of all banks. Moreover, ABA will urge the FDIC to update its assessment plans in light of the acceleration in rebuilding the DIF, adjusting plans in line with the timeline provided by Congress. We will strongly oppose using the DIF and premiums paid into the DIF as a means of off-setting or financing, either directly or indirectly, non-deposit insurance government expenditures. Expenditures by the FDIC need to come under closer scrutiny to avoid waste and ensure thrift.
Reinvigorating Prudent Mortgage Lending
Today regulation, rather than consumer and business realities, is driving the housing markets. ABA supports efforts to strengthen the flow of financing for sound residential loans, including first mortgages and home equity loans. We are committed to avoiding measures that would unwisely limit prudent lending and undermine economic recovery. We support efforts to enhance the availability of mortgage financing in ways that align the interests of borrowers, lenders, and investors, and we believe that this reform must be done in a way that does not discourage recovery of the secondary mortgage market. In particular, we will be working to ensure that the implementation of Dodd-Frank Act definitions of "Qualified Residential Mortgage" and "Qualified Mortgage" stay focused on genuine underwriting concerns and are not crafted and applied in ways that curb access to credit for credit-worthy borrowers or that give advantages to the housing GSEs.
Reforming Fannie Mae and Freddie Mac
ABA will work for secondary mortgage market reform and the end of GSE conservatorships. ABA will seek a series of initial steps toward comprehensive reform which can be taken without legislation. These include gradually increasing GSE fees to price government guarantees properly and reducing conforming loan limits which were inflated during the crisis. In the longer term, ABA will seek a continuation of these policies and legislation to establish a more fully private market where a majority of conforming loans are sold to the secondary market without any federal guarantee whatsoever, but in which there is a limited, controlled governmental role in ensuring equitable secondary market access for banks of all sizes. ABA will continue to work to ensure that the evolution of the secondary mortgage market meets the needs of primary lenders, does not usurp the role of the primary market, and encourages stable, liquid, and competitive markets that best meet mortgage borrower needs.
Federal Home Loan Banks
ABA will support a strong and vigorous Federal Home Loan Bank System, fully capable of providing liquidity and funding necessary to manage balance sheets and prudently support new demands for lending by the banking industry. ABA will oppose any efforts to restructure the secondary market GSEs in a manner that would diminish or jeopardize the mission and function of the Federal Home Loan Banks.
Robust Securitization Market
We support efforts to create the conditions for the recovery of the financial asset securitization markets, including proposals to align the interests of borrowers, lenders, and investors in securitization transactions. Current regulatory proposals to implement retention provisions of the Dodd-Frank Act would misalign those interests and, if adopted without substantial improvements, would stifle recovery of the securitization markets. We will support efforts to ensure that the credit risk retention requirements reflect the significant differences among the various asset classes and that the final rules do not serve as a disincentive to securitize assets.
Unfair Competition from Credit Unions and Farm Credit System
We will continue our work to address efforts of the credit union industry and Farm Credit System to abandon their core missions and use their government advantages to expand into the banking business. In particular, we will oppose plans to expand business lending by credit unions as risky for their regulatory structure and inconsistent with their core mission to people of modest means. We believe that credit unions, that receive significant government benefits in order to serve particularly low and moderate income people, should be required to demonstrate, through measurable standards, that they are meeting their service obligations. We believe that ending the tax exemption for credit unions should be part of fiscal reform. Moves to broaden government advantages to these institutions will be strongly opposed, while policy makers will be encouraged to require these institutions to return to their core missions or formally obtain a banking charter. Where such an institution chooses to seek a banking charter, procedural barriers to charter conversion (apart from appropriate safety and soundness considerations) should be removed. We will seek an end to federal tax benefits for the Farm Credit System and to have the Farm Credit System brought under the supervision of the new GSE regulator.
Small Business Administration
In an environment in which small business top and bottom lines have been under prolonged stress, Small Business Administration credit programs, with appropriate enhancements, have been a significant contributor to job creation through the increased availability of credit to small businesses. ABA will continue to encourage and support the Small Business Administration in its efforts to increase the availability of credit to our nation's small businesses. We will encourage Congress to provide increased funding to the SBA, and we will support the renewal and reinstatement of higher percentage credit guarantee programs, larger borrowing limits, and lower fees.
Fundamental Policy Principles
Promoting the Security of America
Recognizing that terrorism affects us all, and that banks are often the targets of attacks, fighting terrorism continues to be a high priority of the banking industry. We are working with executive branch agencies and the Congress to improve both effectiveness and focus of programs that achieve tangible results to upset terrorist plans. Banking industry leadership includes areas such as financial system resilience, anti-money laundering efforts, and enhanced physical security measures.
Serving the Whole Community
The banking industry takes pride in its strong record of compliance with anti-discrimination standards and fair lending laws and regulations. Banks have also been the leading source for providing financial services within their competency to our communities, in keeping with prudent lending standards, as demonstrated by consistently high records of compliance with the Community Reinvestment Act.
Regulatory Effectiveness and Efficiency
Promoting the effectiveness and efficiency of regulatory requirements is a constant effort and a primary purpose of ABA. The measure of a law or regulation must be whether it helps the banking industry serve our customers; if it makes it harder or interferes with efforts to serve our customers, then the law or regulation must be changed. We believe that consistency in regulatory standards and coordination of similar regulatory requirements among appropriate regulatory agencies is important to the achievement of these goals. Most frequently, this can be achieved through joint rulemaking involving all of the relevant agencies. The activities of the new consumer Bureau and the new systemic risk supervisory structure should be closely integrated with the work of other bank regulatory agencies to ensure that their proposals and actions are efficient and effective in practice and in facilitating the ability of the banking industry to serve our customers profitably and thereby on a sustained basis.
Financial Education
ABA strongly supports financial literacy initiatives at the local, state and federal levels. ABA directly supports bankers' efforts through its financial education subsidiary, the ABA Education Foundation. Founded by bankers in 1925, the Foundation assists bankers in their work to promote financially literate customers and communities. For example, nearly 130,000 banker volunteers have reached more than 5.4 million young people through the Foundation's signature programs: Teach Children to Save and Get Smart About Credit. A more financially literate population helps benefits customers and banks alike, and ABA members will continue to expand their successful financial education efforts.
Minority Depository Institutions
ABA promotes the vitality of minority and multi-cultural owned financial institutions and community development banking institutions that serve minority, multi-cultural, and low-wealth communities. ABA is dedicated to understanding the priorities and needs of minority-focused financial institutions, and identifying member services and products that can bring greater value to their work to serve their customers.
Agriculture and Rural Development
Today, rural America comprises over 2,000 counties, contains 75 percent of the nation's land, and includes 49 million people. ABA supports economic development initiatives that encourage economic growth in rural America and that center such strategies on the banking industry. ABA has long recognized and championed the key role banks play in maintaining a healthy rural economy.
Key ABA Activities to Support Priorities
Direct Contact Bankers — Implement a new, stronger grassroots program involving more bankers in more direct communication with policy makers.
BankPac — Increase the funds raised by BankPac by broadening the base of contributors, building resources to promote election to Congress of people who support policies important to the banking industry.
Financial Education — Continue to expand banker efforts to educate people on how to save, invest, and manage their money wisely.
Other Resources
