ICBA commended the FDIC board of directors for withdrawing three ICBA-opposed proposed rules that would harm community banks and the communities they serve.
FDIC Announcement: As advocated by ICBA, the FDIC announced it is withdrawing proposals to:
Revise its brokered deposits framework so more deposits would be considered brokered and fewer would be considered core deposits.
Impose new diversity and independence requirements to bank boards, as well as other large bank corporate governance standards, on community banks.
Apply new incentive-based compensation standards to community banks despite a lack of support from all of the regulatory agencies that must participate in the rulemaking according to statute.
ICBA Response: In a national news release, ICBA President and CEO Rebeca Romero Rainey said the proposals, if finalized, would restrict bank liquidity, conflict with state laws, impose sweeping new requirements on bank boards, and significantly depart from current practice.
ICBA Advocacy:
Brokered Deposits: In a comment letter, joint letter with state banking associations, industry letter with other national banking groups, and grassroots advocacy campaign in November 2024, ICBA and community bankers said the proposal would constrain community bank access to liquidity and disrupt third-party relationships that provide valued online banking and deposit services to customers. ICBA urged the agency not to subject the industry to rapidly changing deposit regulations or steep compliance costs.
Corporate Governance: In a comment letter, joint letter with state community banking associations, and grassroots advocacy campaign in February 2024, ICBA and community bankers expressed strong opposition to the FDIC’s proposed corporate governance and risk management guidelines, noting they are more prescriptive than the Fed and OCC corporate governance rules that apply only to the largest banks and would make attracting directors extremely difficult for community banks, particularly in rural areas.
Incentive-Based Compensation: ICBA also urged the FDIC to withdraw its proposed rule on incentive-based compensation, which lacked interagency support from all statutorily required regulatory agencies, noting the duplicative rulemaking effort is confusing and would divert community banks from meeting the needs of local communities.
Change in Bank Control Act: The FDIC also announced the withdrawal of a proposed rule that would apply the agency’s regulations under the Change in Bank Control Act to large asset managers that acquire controlling shares in FDIC-supervised institutions.
More: The FDIC said if it pursues regulatory action on these matters in the future, it will do so by publishing new proposals or other issuances consistent with the Administrative Procedure Act.
Outlook: ICBA said it looks forward to continuing to work with the Trump administration and the 119th Congress to advance pro-community bank reforms in its ‘Repair, Reform, and Thrive’ plan.
