Policy Resolutions

Community bankers are committed to support balanced, effective measures that stop terrorists from using the financial system to fund their operations and prevent money launderers from hiding the proceeds of criminal activities.  However, ICBA strongly urges the federal government to recognize the costs and burdens that these requirements place on financial institutions, especially community banks, and to find ways to streamline requirements.  For example, the rules under section 314(a) of the USA PATRIOT Act require banks to undertake extensive and frequent record reviews to search for matches with possible suspects while Customer Identification Program (CIP) rules require extensive tracking of data on the information used to verify a customer’s identity.

Bank Secrecy Act (BSA) Requirements Should Be Flexible and Easily Applied.  ICBA encourages the federal government to continue working with the banking industry to provide additional guidance—such as best practices, questions and answers, or commentary—that is understandable, workable and easily applied by community banks.  The interagency Bank Secrecy Act/Anti-Money Laundering Manual issued in June 2005 and the subsequent outreach sessions, where the industry and regulators worked together, are an excellent model.  ICBA also urges Treasury to refine the process for record reviews under section 314(a) and encourages the Office of Foreign Asset Control (OFAC) to streamline and simplify its lists for ease of reference and application by bankers.

Communication Among Industry, Law Enforcement and the Government is Critical.  Since cooperation between the government and financial institutions in a true working partnership is vital to stop terrorism and money laundering, ICBA urges the government to expand and enhance communications to alert bankers to fact patterns and practices that may be indicative of money laundering or terrorist financing.

BSA Reporting Should Be Simplified and Focus on Truly Suspect Activities.  As the government continues to combat money laundering and terrorist financing, it is important to focus on quality over quantity for all BSA reporting.  The threshold triggering a Currency Transaction Report (CTR) filing has remained at $10,000 since 1970; it should be increased to at least $30,000.  In addition, Treasury and FinCEN should refine the process for exempting transactions from CTR filing to simplify their application in a cost-effective way so that routine transactions are not reported.  It is also important that existing efforts to file reports electronically be enhanced and expanded.  The government should require reporting of only truly suspect transactions—and strive to balance those requirements against the need to respect customer privacy.   ICBA is working with Treasury on these and other efforts to develop an effective reporting system.

ICBA has long supported world-class, independent regulatory agencies, such as the FDIC and the Federal Reserve, which are governed by boards independent of the Treasury Department.  These agencies have worked effectively.  Following that same model, ICBA believes that the GSEs’ safety and soundness regulator must be independent of political influence.

FHLBanks.  The FHLBanks’ cooperative ownership structure, operations, and mission are very different from the publicly traded housing GSEs, Fannie Mae and Freddie Mac.  It is important that a new regulator be organized in a way that recognizes and maintains these differences.  Clarifying the FHLBanks’ mission to encompass support for small farms, small agribusiness, and small business financing will help ensure that the FHLBanks use the new authority provided by the Gramm-Leach-Bliley Act of 1999.

Regulatory Powers.  The bank regulatory agencies provide a good model for improved GSE safety and soundness regulation.  So long as the agency has sufficient powers to protect the GSEs’ safety and soundness, there is no need to grant a GSE regulator authority to determine whether a GSE poses “systemic” or “competitive” risk.  Giving a regulator that sort of open-ended authority could open the door to unnecessary and inappropriate restrictions on GSE activities.

GSE Status.  The housing GSEs play an important role in helping lenders provide competitive mortgage financing to millions of consumers.  This has made possible a record level of homeownership in America.  Eliminating or weakening the GSE status of Fannie Mae, Freddie Mac, and the FHLBanks would undermine this achievement.  Limits on GSEs portfolios not based on safety and soundness concerns could undermine their ability to provide liquidity to the housing markets.  Attempts to limit GSEs’ activities to a narrowly defined list of permissible activities or impose unworkable restrictions on new activities could weaken their ability to support homeownership and assist community banks provide home loans to their customers.

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