The Independent Community Bankers of America® (ICBA) called on President Donald Trump’s administration to rein in the overzealous application of fair lending laws. ICBA said despite community banks’ strong compliance systems for ensuring credit decisions are fairly and uniformly applied without regard to race, gender or national origin, these local institutions are threatened by a recent trend of unwarranted enforcement actions.
“Community banks are fully committed to fair lending and strongly oppose discrimination prohibited under laws such as the Fair Housing Act and Equal Credit Opportunity Act,” ICBA President and CEO Camden R. Fine said. “However, community banks are experiencing enforcement overreach that diverts an abundance of resources from serving their local communities to complying with and responding to unwarranted fair lending allegations.”
The nation’s nearly 6,000 community banks abhor illegal discrimination and support the use of consistent and transparent standards when regulators evaluate lending practices. But groundless claims, prolonged enforcement actions, and unnecessary litigation harm community banks and the customers they serve by undermining the availability of credit in local communities and throughout the economy.
Most recently, the Justice Department filed a misguided and baseless claim against family-owned KleinBank, a 110-year-old institution that has never been cited for fair lending violations by its primary regulator, the Federal Deposit Insurance Corp. The Justice Department penalized the suburban community bank for not marketing to or having branch offices in nearby Minneapolis or St. Paul, unilaterally determining that KleinBank should broaden its market presence to these distinct communities.
This and similar actions directly attack the community banking model, in which hometown financial institutions serve their local communities and economies. Requiring community banks to expand their market presence into neighboring counties would force them to alter their model and sound business practices. ICBA looks forward to working with the new administration on these issues.
The Independent Community Bankers of America®, the nation’s voice for nearly 6,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services.