Pub. 3 2013-2014 Issue 6

6 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S A Word From CBA... Taking Aim at Banks’ Regulatory Burdens Now is the time for banking to start changing laws so it can actually help provide credit rather than hinder it. That is why state bankers associations have banded together with the American Bankers Association to form the ABA/ Alliance Regulatory Relief Task Force. The task force has set its sights on the single biggest change to benefit banking broadly: exempt portfolio loans from ATR and QM – and get it enacted this year, 2014! A single, rifle shot approach. Banks live in an environment where excessive CFPB rules are enforced by “zero tolerance” bank regulators resulting in extreme compliance caution. Now regula- tory risk outweighs credit risk for banks. Customers are “protected” to the point of losing access to credit; under the new rules it is harder for certain customer groups to find loans they need. The task force began work in late February and has since met eight times. I have the privilege of chairing it. It is composed of six experienced state bankers as- sociation executives (Roger Beverage, OK; Joe Brannen, GA; Don Childears, CO; Kathleen Murphy, MD; Linda Navarro, OR; and JoeWitt, MN) with tremendous support from talented senior ABA staff (Wayne Abernathy, James Ballentine, JimChessen, Bob Davis, andmore recently Joe Pigg and Paul Katz). It has two working groups: legislative for Congressional action, and regulatory for those issues we seek to resolve in the agencies. This campaign for Congressional action this year her- alds the start of many efforts to address various regulatory burdens in a pragmatic, results-oriented manner. After reviewing 48 significant regulatory burdens in terms of their urgency to banks and how to resolve them (pass leg- islation, convince regulators to alter their views, engage in other actions such as litigation where appropriate or seek- ing FASB changes), the task force focused on mortgages. The campaign for Congress to pass a bill written by the task force started in April. The bill contains two key provisions: • Legislatively exempting portfolio loans from ATR and QM • Legislatively amending Dodd/Frank Act mortgage escrow requirements The legislative effort is designed for a bill to be enacted this year. Both changes are simple and easy to explain, and the portfolio loans change gives banks flexibility to deal with barriers from the new rules like balloon loans, DTI, 3rd party verification. These changes restore a bank’s abil - ity to lend to customers hurt by themortgage rules. The bill is the “Enhanced Mortgage Availability Act of 2014” and does enhance consumers’ ability to obtainmortgage credit. Those most negatively impacted by current mortgage rules include: low income individuals, small business own- ers, rural residents, retired individuals, newly employed, and others hard to document. The task force will try to work with various groups (such as Urban League, La Raza, NFIB, FarmBureau and others) to fix the damage inflicted on those constituencies. Those unusual allies should help us convince legislators often on the other side of issues from us. The task force also will advocate three targeted capital issues in the regulatory agencies rather than Congress after the legislative campaign is underway. They include: • Simplification – Simplified capital analysis for highly capitalized banks to spare those banks the tedium of analysis just to conclude they are well capitalized • ALLL – ALLL counted as capital – replace the arbi- trary 1.25% limit with all ALLL counted as capital except that allowance for loans classified as “loss.” • Mortgage servicing – Grandfather existing mort- gage servicing assets so banks that emphasized mortgage servicing aren’t punished. Details on strategies, messaging and other efforts to urge regulatory agencies to change policies will be provided later when these efforts are started. We know we can’t do everything we want to do, and can’t even domany things soon. There simply are toomany burdens on banks. The odds are bad; while we can’t assure the outcome we do guarantee great effort. We believe we have an appropriately narrow focus, a smart plan, tremen- dous energy, and the best possible advocates: bankers. n Don Childears, President/CEO Colorado Bankers Association