Proposal would loosen rules on community banks

MONTPELIER — At the National Community Bank in Montpelier last month, U.S. Rep. Peter Welch, D-Vt., unveiled bipartisan legislation to provide targeted regulatory relief to small community banks across the country.
 Joining Rep. Welch at the news conference were community bank leaders from around the state, including Mark Young of the First Bank of Orwell, Reagan Howard of Community National Bank, Ken Perrine of the National Bank of Middlebury, Steve Kendall of Union Bank and Chris D’Elia of the Vermont Bankers Association. Also participating was Tom Candon with the Vermont Department of Financial Regulation.
Welch’s legislation, The Community Bank Regulatory Relief Act, will provide small community banks with targeted regulatory relief from the Dodd-Frank law enacted by Congress in the aftermath of the near total collapse of the American economy in 2008. The crisis and subsequent Great Recession was triggered by the high risk and speculative financial activities of large Wall Street banks. Welch’s bill would make it easier for small community banks to raise capital and provide flexibility on issuing mortgage loans while ensuring consumer protection. It would also give community banks a permanent seat at the table at the Federal Reserve Board.
Oklahoma Republican Rep. James Lankford is a cosponsor of the bill with Rep. Welch.
 “Dodd-Frank reforms are essential to rein in the Wall Street banks that actively plunged the American economy into a deep recession,” said Welch. “Those institutions intentionally engaged in the financial Wild West of proprietary trading in derivatives and the packaging and sale of toxic mortgages. Their activities must be regulated to protect the American economy and consumers. Community banks on the other hand were, and still are, in the business of lending money to the real economy by providing much needed loans to American small businesses and families. They are not in the business of casino style financial trading and should not be regulated as if they are.”
National Community Bank President Stephen Marsh backs Welch’s bill.
“We are extremely pleased that Congressman Welch has taken the lead on this legislation,” he said. “Community banks are not part of the problem, they are part of the solution. Peter gets it. He also has a proven track record of getting things done in a bipartisan way in Washington. Thank you Peter for understanding our issues and being at the forefront to help.”
 Specifically, the Welch-Lankford bill:
 • Makes it easier for small bank holding companies to raise additional capital by issuing debt; qualifying bank and thrift holding companies must not have significant outstanding debt or be engaged in nonbanking activities that involve significant leverage.
•  Allows community banks to more easily comply with mortgage regulations,
•  Exempts community banks from certain escrow requirements for loans.
•  Eliminates the requirement that financial institutions mail annual privacy notices to its customers even when no change in policy has occurred; banks would still be required to notify their customers of any change in privacy policies.
•  Directs the Federal Reserve to have at least one board member with demonstrated experience working in community banks.
•  Allows for community banks that predominantly operate in rural areas to create financial products that better suit rural communities’ needs.

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