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Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release May 12, 2004 #04-24
E-mail: [email protected]

AMERICA’S COMMUNITY BANKERS URGES CONGRESS TO PROVIDE FURTHER REGULATORY RELIEF

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WASHINGTON, D.C. — Layers of regulation are a heavy burden preventing community banks from fully supporting the financial needs of their communities, America’s Community Bankers told Congress today.

“As a community banker, I see projects that will not get funded, products not offered and consumers not served because I have had to make a large resource commitment to comply with the same regulations with which banks thousands of times larger must comply,” said Mark Macomber, president and CEO of Litchfield Bancorp, Litchfield, Conn.

Macomber was testifying before the Financial Institutions Subcommittee of the House Financial Services Committee. Litchfield Bancorp is a mutual holding company for two state-chartered community banks.

“In the past 10 years, a number of very burdensome regulations have been layered onto an already heavy burden,” said Macomber. “In just the past three years, significant burden has been added by the enactment of the USA Patriot Act and the Sarbanes-Oxley Act.”

Macomber said he understands the importance of the new laws and supports their goals, but he added: “As a community banker, I see how much it costs my small mutual community bank, both financially and in number of hours, to comply with just these two laws.”

Macomber thanked the subcommittee for its leadership in passing a regulatory relief bill, H.R. 1375, in the House, and said ACB is working with the Senate to enact similar legislation.

Macomber made several recommendations for further action to reduce regulatory burden and red tape:

ACB strongly supports H.R. 3952, a bill to raise the limit on streamlined Community Reinvestment Act examinations to $1 billion in assets. The current limit is $250 million. Macomber said a Congressional Research Service report estimated that the streamlined exam would save a community bank 40 percent in compliance costs.

Macomber said the bill “will free up capital and other resources for almost 1,700 community banks across our nation. . .allowing them to invest even more into their local communities.”

He also discussed the need to correct the competitive inequity caused by credit unions being exempt from taxation. “A primary burden for many community banks is that they pay taxes but compete against a new breed of credit unions that operate as full service banks that do not pay taxes to support federal, state or local governments,” Macomber said. Community banks pay taxes to their local communities, “providing important funds that are used for police officers and firefighters, for fixing roads and for improving our children’s schools,” he said.

Macomber said that while ACB recognizes that the subcommittee does not have jurisdiction over tax issues, “you hold the other shoe by controlling the expansion of credit union authorities that implicitly expand their tax advantages, and by overseeing the regulators that also are expanding authorities and the scope of the tax exemption.”

Macomber added: “Correcting that inequity, either by taxing bank-like credit unions or giving community banks tax relief, and ensuring appropriate safety and soundness practices in bank-like credit unions, should be a high priority for Congress.” He urged subcommittee members to support the review by House Ways and Means Committee Chairman Bill Thomas (R-Calif.) of tax-exempt organizations, including credit unions. In addition, he urged support for legislation that would allow more community banks to adopt the subchapter S corporation tax option.

Macomber also urged Congress to ensure that the Basel II capital regime does not put community banks at a competitive disadvantage with large, internationally active institutions. He said regulators should consider a more simplified approach that could be made available to all institutions.

Click here for the testimony.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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