Pub. 3 2015 Issue 3

18 The Community Banker www.mibonline.org From the Chairman W hen I speak with community bankers around the country about regulations, the words I usually hear are frustrated, overburdened, pile-on, crushing and no common sense. While I completely agree with those, I want to add one more word— opportunity. Simply put, community bank- ers don’t like it when regulations get in our way of taking care of our customers and communi- ties. We and our customers are frustrated by the alphabet soup of regulations we must deal with. My staff, for example, spends an enormous amount of time on our Bank Secrecy Act and Customer Identification Pro- gram, even though we know our customers extremely well. In fact, we know many of their family members. Then there are the new mortgage rules that pertain to Ability-to-Repay, Qualified Mort- gage and TILA-RESPA Integrated Disclosure rules. The Consumer Financial Protection Bureau has decided no customer with over a 43 percent debt-to-income ratio should be considered for a more affordable QM loan. Yet nearly 20 percent of the mort- gages my bank originates and holds in portfolio exceed that ratio. So we have had to com- pletely rewrite our policies and procedures to continue serving these customers, most of whom are small-business owners or people on fixed incomes. I give the CFPB credit for cre- ating a community bank exemp- tion for loans held in portfolio, but the exception falls short of covering all community banks that inherently would never offer their customers harmful products. Then there’s the TRID rule. Our software vendors have all struggled to allow our banks to be ready by the rule’s Oct. 3 starting date. I also don’t ever remember a regulatory change this major that was implement- ed like this one, where one day a switch is flipped on and we have to be 100 percent compliant, with no phase-in. Also, the rule’s three-day delay due to loan closing disclosures will increase my cus- tomer’s rates by making it nearly impossible to close a mortgage within 30 days of taking an ap- plication. In the past, most com- munity banks like mine could use the 30-day forward-rate commitment to obtain the best possible interest rates for our customers from the govern- ment-sponsored enterprises. But now we will need to use the 45-day or 60-day rate commit- ments that have the customer paying 1/8 to 1/4 percent higher in rates for the same loan. So where does opportunity fit with regulatory burden? We have an opportunity to change the regulatory wind direction against us. Our industry defines Main Street. Legislators and regulators know community bankers are the “good guys.” Our sterling reputation, along with our unrelenting advocacy for doing what’s right, has allowed ICBA and community bankers to achieve important successes like asset-based FDIC assessments, tiered QM rules, Basel III carve outs and many others. Congress has introduced more than 25 bills for commu- nity bank regulatory relief, but lawmakers need our help to push them over the goal line. ICBA has teed up many of these bills, but everyone in our indus- try must advocate for them. Let’s not squander this opportunity. Stand up. Step up. Speak up. Jack Hartings is president and CEO of The Peoples Bank Co. in Coldwater, Ohio. OPPORTUNITY IS KNOCKING By Jack Hartings, Chairman of ICBA I give the CFPB credit for creating a community bank exemption for loans held in portfolio, but the exception falls short of covering all community banks that inherently would never offer their cus- tomers harmful products.