Federal legislation, the Community Lending Enhancement and Regulatory Relief (CLEAR) Act, has been introduced in the Senate and the House that would relieve regulatory burdens on community banks. Sens. Jerry Moran (R-KS), Jon Tester (D-MT), and Mark Kirk (R-IL) have introduced S. 1349 in the Senate, and Rep. Blaine Luetkemeyer (R-MO) has introduced H.R. 1750 in the House. The CLEAR Act is part of a sincere effort underway in Congress to address community banks’ concerns with growing regulatory burdens. This legislation, along with other legislative proposals that address the current Basel III regulatory capital proposal, reform the bank examination process, and ensure that municipal advisor registration requirements do not apply to commercial banks and savings associations, are movements in the right direction of assisting community banks. The legislation includes several provisions that CBA has long advocated, including:

• Expanding the Qualified Mortgage (QM) safe harbor. The expanded safe harbor would include loans originated and retained in portfolio for a period of at least three years by a creditor having less than $10 billion in total assets. It also would provide that the CFPB “shall” include balloon loans originated and retained in portfolio for at least three years by such creditors.
• Reducing unnecessary annual privacy notices. The bills would provide an exemption from the Gramm-Leach-Bliley Act’s annual notice requirement for institutions that have not changed their privacy policies and only share personal information within the statutory exceptions. This would result in significant savings in mailing costs for banks across the country. Institutions that changed their privacy policies during the preceding year still would be required to provide notices.
• Requiring a cost-benefit analysis for any new or amended accounting principle. The legislation would require the Securities and Exchange Commission (SEC) to conduct an analysis of the costs and benefits, including economic benefits, of any new or amended accounting principle. Benefits to investors would have to outweigh costs before the SEC could recognize the principle. The bills would ensure that the best possible assessment is made of new accounting principles so that regulated entities are not subject to unnecessary costs that outweigh any potential regulatory benefit.
• Exempting smaller institutions from management attestation requirements. The bills would amend Section 404 of the Sarbanes-Oxley Act to provide that the management attestation requirements do not apply to any insured depository institution with total consolidated assets of $10 billion or less.