Issues

2019 Legislative Policy Priorities

Support the Enhancing Credit Opportunities in Rural America (ECORA) Act of 2019 (H.R. 1872 & S. 1641)
KBA supports the ECORA Act (H.R. 1872 & S. 1641), which will help revitalize rural Kansas communities and provide
much-needed relief to Kansas agricultural producers struggling with this extended period of weak commodity prices.
This legislation will support Kansas farmers, ranchers and residents of rural Kansas communities by creating a new,
targeted tax incentives for agricultural real estate and rural residential lending. The Act would specifically benefit rural
borrowers of agricultural real estate and rural home mortgages through low interest rates and greater access to credit.

*Just as important as addressing the short term needs of agricultural producers and sustaining the rural
housing market, the ECORA Act will also help preserve the community banking model in Kansas by
leveling the playing field with respect to income tax policy between main-street Kansas banks and the Farm
Credit System.

Remove the Depression-Era Tax Exempt Status for Large Bank-Like Credit Unions
KBA supports ending the tax-free ride enjoyed by large bank-like credit unions operating in Kansas. These large bank
-like credit unions have largely abandoned their mission of serving low income customers and have instead used their
income-tax-free profits to construct palatial office buildings, while also providing lucrative compensation packages to
their senior executives. These large credit unions are also aggressively expanding their business lending activity,
threatening the long-term viability of tax-paying community banks. Congress established credit unions in the 1930s to
provide small-dollar loans to close-knit groups of people of modest means. To encourage credit unions in their mis-
sion, Congress exempted credit unions from federal income taxes. However, many of
today’s credit unions, including several operating in Kansas, bear little resemblance to the industry that originally re-
ceived this special tax exemption and today have become indistinguishable from the tax-paying banking
industry.

Protect Kansas Consumers by Establishing Strong National Data Security & Privacy Standards
KBA supports a strong national data security standard that would require all entities, including retailers, that handle
sensitive personal information to protect consumer data and provide notice in the event of a breach that puts
consumers and their respective financial institution at risk. The banking industry spends billions of dollars every year
to protect consumers by investing in technology to detect and prevent fraud, reissue compromised credit cards and
absorb other fraud-related costs. While robust federal data security and privacy requirements for banks have been in
place for over 20 years, other business sectors lack comparable requirements and have been the source of many
large-scale breaches. This much needed federal standard must recognize that banks already
comply with strong consumer-protection standards for data security and privacy and should also ensure that banks
are preempted from a myriad of state laws and regulations that would ultimately harm and cost consumers.

Support the Secure and Fair Enforcement (SAFE) Banking Act (H.R. 1595 & S. 1200)
KBA supports the SAFE Act, which will allow banks to serve cannabis-related businesses in states where the
activity is legal and clarify that handling proceeds from their legitimate transactions is not money laundering
and does not violate federal law.

Support the Corporate Transparency Act of 2019 (H.R. 2513)
KBA supports H.R. 2513, which requires corporations and limited liability companies to self-report beneficial
ownership to FinCEN at the time of the formation of the entity. It would also require all companies within two years
to file this information with FinCEN.

Support Government Sponsored Entity (GSE) Reform That Ensures Secondary Market Access for Banks
KBA believes the overarching principle considered during GSE reform deliberations should be ensuring access to
secondary market financing for banks of all sizes while simultaneously safeguarding that governmental entities do
NOT compete directly with the private market. KBA also supports the vitally important role of the Federal Home
Loan Bank (FHLB) system and discourages any policy change that would limit or harm the ability of the FHLB
system from being a consistent, reliable funding source for Kansas banks.

2019 Regulatory Policy Priorities

Delay the Implementation of the Current Expected Credit Loss (CECL) Accounting Standard (S. 1564)
KBA urges Congress and federal bank regulators to delay and study the impact of the Financial Accounting Stand-
ard Board’s CECL accounting standard which requires banks to record allowances for credit losses on loans and
held-to-maturity debt securities at origination, based on a so-called “life of loan loss” expectation. Higher and more
volatile Allowance for Loan and Lease Loss (ALLL) levels and higher operational costs will reduce available capital
and limit a bank’s ability to meet credit needs, especially during an economic
downturn.

*The KBA commends the 15 senators who sent a letter asking the banking regulators for a review of the
CECL rule and to delay implementation until the impact on credit is known. KBA also encourages the
House and Senate to act on legislation which also urges a study of the effects on credit and would delay
effectiveness for up to a year after the study is completed.

Set Community Bank Leverage Ratio (CBLR) at 8% and Re-Visit Prompt Corrective Action (PCA) Rules
Section 201 of S. 2155 allows the banking agencies to set an optional Community Bank Leverage Ratio (CBLR) for
some banks with total assets with less than $10 billion as low as 8%. The agencies’ proposal of 9% is unnecessarily
high as American Bankers Association research has found that every single qualifying community bank that has an
8% CBLR is already meeting the well-capitalized risk-based capital ratios under Basel III. In addition, the new pro-
posed Prompt Corrective Action (PCA) for those institutions that opt in to the CBLR, but later fall below the required
capital ratio will create a cycle that will not allow that institution to
recover and be considered well-capitalized again.

Modernize the Bank Secrecy Act (BSA) and Adopt a Seasoned Customer CTR Exemption
KBA supports Congressman Cleaver’s efforts to pass H.R. 2514 which would provide feedback on Currency Trans-
action Reports (CTR) and study the need for an increased threshold. The KBA would also urge the adoption of a
seasoned customer exemption that would let banks exempt known customers within
parameters set by regulations established by U.S. Treasury to eliminate unnecessary CTR filings.

Community Reinvestment Act (CRA) Reform
KBA supports the efforts of federal bank regulators to modernize the Community Reinvestment Act (CRA) with the
goal of increasing consistency in exams and expanding activity that counts towards credit.

Shortage of Appraisers Serving Rural Kansas
KBA supports an alternative to the Appraisal Qualifications Board’s prohibitive mentoring requirement for new li-
censed and certified appraisers.

Faster Payments System
KBA supports maintaining the Federal Reserve Bank’s role of ensuring that financial institutions of all sizes can par-
ticipate equally in a faster (24/7/365) payments system.

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Home Mortgage Disclosure Act (HMDA) Exemption Expansion
KBA supports adoption of the expansion of HMDA reporting exemptions (moving closed-end to 100 and
permanently making the open-end exemption 500).

Small Dollar Lending
KBA supports the adoption of rules to allow banks to continue operating in the small dollar lending market, such as
providing acceptable rate assignments and encouraging such lending with consistent CRA credit.

National Rate Cap
KBA encourages federal bank regulators to ensure the national rate cap is only applied to institutions that are NOT
well-capitalized and adopt a dynamic market rate that reflects local markets and is useful for institutions of all sizes.