WASHINGTON – U.S. Senator Kevin Cramer (R-ND) introduced legislation today to provide community banks with regulatory relief as coronavirus continues to negatively impact the economy.

“A combination of good management by industry leaders and prompt action by the Federal Reserve has given our system the liquidity it needs to combat the economic downturn, but current laws and regulations create perverse incentives for financial institutions to hold available funds rather than to responsibly disperse them to qualifying individuals,” said Senator Cramer. “Without adding new money to the market, our bill frees already-existing funds by knocking down regulatory barriers, moving money from the bank to Main Street where it’s needed. I hope we include this legislation in the next relief package Congress considers.”

Senator Cramer was joined in introducing S. 3502, “The Community Bank Regulatory Relief Act,” by fellow Senate Banking Committee members Tom Cotton (R-AR), Thom Tillis (R-NC), and Jerry Moran (R-KS).

“Our first priorities right now must be protecting Americans’ health and hard-earned money from disruptions caused by the Wuhan virus emergency,” said Senator Cotton. “This bill would shield small banks from cumbersome regulations to ensure they can continue operating and meeting the needs of their communities, including to help keep families and small businesses afloat, during this crisis.”

“As we work to combat the spread of coronavirus, we must ensure our community and regional banks have the flexibility they need to serve communities,” said Senator Tillis. “This legislation will provide regulatory relief to these financial institutions and allow them to play an important role in our economic recovery.”

“Over the coming weeks, Kansans need to be able to turn to their local banks for financial support,” said Senator Moran. “Lenders should not be forced to tighten their lending practices when the economy needs it the most. These two sensible measures will help free up capital to ensure community banks are able to support customers who are struggling due to the effects of coronavirus, all at no additional cost to the taxpayer.”

The Community Bank Regulatory Relief Act makes two commonsense changes to ease the regulatory burden on community banks. They are:

  1. Lowering the community bank leverage ratio (CBLR), a ratio of capital to unweighted assets developed by federal banking agencies, from 9 percent to 8 percent. This would give community banks extra resources to meet their financial needs during the coronavirus pandemic.
  2. Delaying the implementation of the cumbersome Current Expected Credit Loss (CECL) accounting standards for community banks until December 2024, freeing them to lend more funds to consumers in times of economic stress.

Click here for a one pager of the bill.

S. 3502 is backed by national and local stakeholders, including independent community bank groups, who offered statements of support. 

"Independent Community Bankers of America (ICBA) and the nation's community banks strongly support Sen. Kevin Cramer's legislation to help community banks meet the needs of local communities at this critical time," said ICBA President and CEO Rebeca Romero Rainey. "Setting an 8 percent Community Bank Leverage Ratio as originally intended by Congress and delaying the implementation of the Current Expected Credit Loss accounting standard to 2025 will increase access to capital in local communities and help sustain economic activity during this historically challenging period. We look forward to continuing to work with Sen. Cramer and others in Congress to advance this common-sense legislation."

“During these difficult and uncertain times, the Independent Community Banks of North Dakota (ICBND) appreciates and strongly supports Senator Cramer’s initiative through the Community Bank Regulatory Relief Act,” said Barry D. Haugen, President of the ICBND. “Reducing the community bank leverage ratio to eight percent would provide additional flexibility for community banks to work with their small business customers during these challenging times. Additionally, delaying the application of the new Current Expected Credit Losses standard will help to avoid disincentives to lending.”

“We welcome Senator Cramer’s proposal, which will allow community banks to stay focused on assisting their customers and communities at this difficult moment for the nation,” said Rob Nichols, American Bankers Association President and CEO. “We urge the Congress to give Sen. Cramer’s measure strong consideration as part of any broader effort to support the U.S. economy.”

“In good times and challenging periods, community banks are there to serve their communities,” said Rick Clayburgh, President and CEO of the North Dakota Bankers Association. “Lending is a critical part of that and this bill will help banks dedicate resources to customers during this difficult period.”

Click here for text of the bill.