Magazine article Independent Banker

Reaping Dividends

Magazine article Independent Banker

Reaping Dividends

Article excerpt

ICBA and community bankers scored an important victory in Washington with the passage of a law exempting most of the industry from a backdoor tax hike on Federal Reserve members. Following unwavering ICBA and community bank advocacy, a new transportation funding law exempts community banks with $10 billion and under in assets from cuts to Fed stock dividends.

Also significant is that the law includes a number of ICBA's Plan for Prosperity regulatory relief measures for community banks.

Tangible rewards. The community bank exemption followed passionate industry advocacy to completely scrap a Senate-passed Fed dividend cut to help pay for federal highways. Congress' final compromise legislation exempts the vast majority of community banks from the dividend cut. Meanwhile, banks over $10 billion in assets will receive a floating dividend not to exceed 6 percent, which is a vast improvement over a flat 1.5 percent rate the original bill contained.

The $10 billion-asset exemption will make a tangible difference for many community banks and their customers. More than 1,800 members of the Federal Reserve are under the asset threshold, and the dividend cut would have cost them an estimated $200 million per year.

Provisions for prosperity. Further demonstrating the industry's clout in Congress, lawmakers also attached several beneficial regulatory-relief provisions from ICBA's Plan for Prosperity agenda to the final transportation law. ICBA had teed these measures up in various bills in Congress and planned to use any moving legislation as a vehicle to get them to the president's desk to sign into law. …

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