Congress passed and President Obama signed into law the Fixing America’s Surface Transportation (FAST) Act. Conceived as transportation legislation, the legislation became hotly debated after several provision targeted the financial industry services. After advocacy by the financial industry and community banks a compromise was reached which included community bank regulatory relief. In the legislation, three bills were included in an amendment to the funding bill.
H.R. 601, the Eliminate Privacy Notice Confusion Act: This legislation will reduce confusion among consumers by clarifying that they will receive privacy notices after opening a new account (only) when their financial institution’s privacy policies change rather than on an annual basis.
H.R. 1553, the Small Bank Exam Cycle Reform Act of 2015: This legislation allows banks with assets up to $1 billion to use an 18‐month exam cycle. A longer exam cycle is believed to reduce distractions and allow bank management to focus on serving their customers and communities.
H.R. 1334, the Holding Company Registration Threshold Equalization Act of 2015: This legislation increases the shareholder registration and deregistration thresholds contained in the JOBS Act (passed a few years ago) to savings and loan holding companies. A thrift holding company will not be required to register with the SEC until it exceeds 2,000 shareholders. A thrift holding company that drops below 1,200 shareholders will be allowed to deregister.
The highway and transportation funding legislation also exempts community banks $10 billion and under from cuts to Federal Reserve Bank stock dividends which will save approximately $200 million per year (ICBA estimate). In addition to the exemption, the law also contains ICBA advocated measures which will: restore funds cut from the federal crop insurance program; drop language that would have extended higher Fannie Mae and Freddie Mac guarantee fees; remove language that a bank must operate “predominantly” in rural or underserved areas to qualify for a QM mortgage underwriting exemption; and establish a process for appealing the CFPB’s rural area designation.