A congressional committee today will hear testimony on U.S. Rep. Blaine Luetkemeyer’s (MO-9) Communities First Act that seeks to help community banks and credit unions foster economic growth on Main Street and continue to serve their communities through targeted regulatory relief.

The House Financial Services Subcommittee on Financial Institutions and Consumer Credit and the Subcommittee on Capital Markets and Government Sponsored Enterprises will hold a joint hearing on H.R. 1697 at 1 p.m. Central Time.  The hearing is scheduled to be broadcast live on CSPAN-3.

“Every day, community banks help Americans improve their lives and realize their dreams.  That mission is becoming more and more difficult for our smaller institutions.  Regulatory, tax, and paperwork requirements disproportionately burden community banks,” Luetkemeyer said. “I introduced the Communities First Act to help community banks and credit unions continue to operate in the smallest of communities by giving regulatory relief to community banks, credit unions and their customers. This legislation provides for many commonsense changes that are long overdue.” 

Examples of provisions in the Communities First Act include:

· Allowing community banks to amortize losses on commercial real estate loans and other real estate owned over 10 years for regulatory capital purposes.  Extended amortization, which would only be temporary, encourages workouts, reduces foreclosures, and allows troubled lenders to survive.  This provision is modeled after a program that helped agricultural lenders in the 1980s.

· Requiring the SEC to conduct a cost/benefit analysis before approving any proposed accounting change.  Accounting standards must provide a benefit commensurate with their cost of compliance.

· Increasing the threshold number for SEC registration of bank shareholders from 500 to 2,000, and for deregistration from 300 to 1700 shareholders.  Annual SEC compliance costs are significant, and this provision will allow community banks to more easily raise capital.

· Extending the 5-year net operating loss (NOL) carryback provision.  Extended NOL carryback will help the community banks who suffered losses during the economic downturn.

· Exempting from the escrow requirement for loans held in portfolio by institutions with under $10 billion in assets.

· Deferring until maturity interest income earned on CDs, and taxing interest earned at the long-term capital gains rate.

· Allowing contributions to a Roth IRA maintained for the benefit of an individual under the age of 26 up to $5,000 per year to encourage long-term savings on behalf of young people.

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