See Rob Nichols' Letter to 115th Congress: Welcome and Priorities
January 4, 2017
Grow the Economy
A thriving economy depends on well-functioning financial markets as well as consumers and businesses that can take advantage of them. More efficient regulation of banks and policies that make credit and debt more manageable for borrowers can increase the ability for all parties to participate in the credit cycle, generating economic growth and prosperity. Properly structured and comprehensive tax reform will also provide further promotion of a growing economy.
Capital and liquidity. Free up bank capital to drive growth by minimizing overly burdensome and unnecessarily complex capital, accounting and liquidity requirements.
Tailored regulation and arbitrary thresholds. Tailor regulation to correspond to business model and risk, eliminate artificial regulatory asset thresholds and pursue a more balanced supervisory process that eliminates drag on bankers’ ability to employ capital to support economic growth.
Tax reform. Reduce rates to drive growth while simplifying the complex tax code—plus eliminating poorly targeted subsidies to massive credit unions and Farm Credit lenders that no longer pursue their missions.
Level playing fields. Reduce economic distortions by providing more charter flexibility and capital options for thrift institutions, including mutual banks, and protecting S-Corp banks from arbitrary disadvantages due to the Basel III capital and other rules.
Small business growth. Fuel lending to job-creating businesses through both increased funding for key SBA loan programs and elimination of regulations that artificially dictate business lending decisions.
Student debt. Change the tax treatment of student debt repayments to help unburden those who have invested in their own potential.
Encourage Innovation while Protecting Consumers
New banking technologies have the potential to increase U.S. competitiveness, promote financial inclusion, and expand access to banking services that drive the economy. Policymakers should facilitate innovation, encourage partnerships of banks and technology firms, preserve the integrity of the payments system and protect banks and consumers against fraud.
Fintech and nonbank competitors. Facilitate partnerships of banks and technology firms, ensure customers are protected through consistent and effective oversight of all providers and encourage innovations by providing a regulatory “greenhouse” for testing new products before roll-out.
Shared responsibility. Ensure that all parties share accountability for protecting customer information and notifying the public after a breach, with the responsible party bearing the costs for their failed security.
Robust culture of cybersecurity. Expand collaborative public-private efforts to fight cyber threats through information-sharing and self-reporting of cyber risks without fear of regulatory sanctions or reputation risk.
Consumer protection and system integrity. Ensure that all payments system participants are subject to the same rules and oversight, fostering a dynamic, innovative and efficient payments system that facilitates growth.
Rebuild the Housing Market
Ensuring Americans have access to mortgage loans and affordable housing can help stabilize communities and provide individuals and families with the means of building wealth. Barriers to this include financial regulation that has tightened mortgage credit markets, an unresolved national housing finance policy and sluggish economic growth that has restricted the building and supply of affordable homes. Policymakers should eliminate these unnecessary impediments to promote stable growth in the housing market.
Mortgage rules. Reform mortgage regulations that have raised costs and prevented banks from flexibly serving their customers—most crucially, by deeming loans held in portfolio as Qualified Mortgages.
Housing finance reform. Constrain the role of the federal government—and potential taxpayer liability—in housing finance to a well-defined, explicit and fully priced guarantee of loans made by private lenders. Ensure equitable access to such programs by lenders of all sizes and from all communities.
Flood insurance. Help homeowners protect themselves by providing more incentives to participate in the National Flood Insurance Program and encouraging development of a strong private flood insurance market.
Rural growth. Pursue pro-growth policies to help farmers manage debt burdens and pricing challenges, fight deposit flight through encouraging access to stable longer-term funding sources, and address the shortage of qualified appraisers in rural areas that hinders real estate transactions.
Affordable housing. Expand the low-income housing tax credit, which currently funds 70 percent of all affordable rental properties.
Remove Impediments to Serving Customers
Well-intentioned but overly prescriptive regulation and price controls, along with overzealous enforcement, can be counter-productive and inhibit the ability of banks to offer products and services that their customers want and need. Policies must strike the right balance between ensuring fundamental standards are met while offering providers flexibility to meet the specific needs of their clients, customers and communities.
Market pricing for card services. Restore market pricing on debit interchange fees so that consumers can again enjoy more flexibility in the products and services that banks offer.
AML/BSA. Limit the burdens of BSA compliance and reporting—especially new requirements that place undue burdens on customers themselves—and eliminate potential sanctions for banking legal businesses.
Small-dollar credit. Promote banks’ ability to serve customers with small-dollar loans and overdraft protection.
Sensible regulation. Oversee finance in a way that promotes growth and innovation, avoiding arbitrary and capricious penalties and providing robust exam review and appeal channels. Update rules to reflect changes in technology and eliminate the trickle down imposition of large bank requirements placed on community banks.