Independent Banker - November 2022 - 49

agreement between the CFPB and
ICBA: the value relationship banking
creates for rural consumers. This
stands in contrast to the large-bank
algorithmic model that often treats
consumers as data points rather than
human beings.
Since credit unions and nonbank
lenders do not comply with CRA
requirements, they would be a more
appropriate target for the CFPB's
section 1071 requirements.
Requiring the Farm Credit
System (FCS) to comply with
1071. If the FCS were a bank,
it would be the ninth largest
U.S. banking institution, with
approximately $450 billion in total
assets and $357 billion in total loans
at year-end 2021. An institution that
large should not be exempt from the
CFPB's section 1071 regulation, as
it would leave out a huge segment of
rural loans, distorting the CFPB's view
of rural lending markets.
Rather than serving the smallest
farm and ranch borrowers who may
have trouble fi nding credit (with loans
of $250,000 or less representing
less than 10% of its loan volume),
the FCS has cherry-picked more
profi table farm loans from community
banks' portfolios.
Reducing bank consolidation.
Reports indicate community banks
are three times more likely to be
located in a rural area than nonbank
Community banks play a critical role in
providing access to basic banking services
that sustain job creation, rural housing,
education and other important local needs.
lenders. Community banks operate
57% of bank offi ces in micropolitan
counties (under 10,000 population)
and 72% of offi ces in rural counties.
The vital role of community banks is
underscored in that approximately
25% of all counties have only a
community bank presence. Clearly,
community banks play a critical role
in providing access to basic banking
services that sustain job creation,
rural housing, education and other
important local needs.
Other merger and acquisition
recommendations
QUICK STAT
72%
of bank offices in rural counties
in the U.S. are operated by
community banks
Source: ICBA
ICBA urged the CFPB to recognize the
challenges rural communities face if
they lose their community bank due
to a merger with a larger bank, which
is why ICBA encouraged the CFPB
to minimize and signifi cantly reduce
regulatory burdens, which increase
banking consolidation by driving up
costs for small lenders.
Additionally, the CFPB could
highlight the need to replace the
antiquated requirements imposed
by the Department of Justice and
the Federal Reserve that prevent
community banks from merging with
other local community banks. As
written, it makes it much easier for
a community bank to merge with a
larger, distant bank than a small local
bank that would result in a stronger
local institution that could serve rural
communities for years to come.
Just as important, the CFPB
should be wary of credit unions
purchasing community banks. When
a community bank is purchased by a
large outside credit union, the result
is often a signifi cant lessening of
credit to a community, in addition
to a reduced tax base to sustain the
community's services.
In addition, ICBA urged the CFPB
to develop a more useful term than
" banking deserts, " as rural residents
can often travel more than 10 miles
to access regular services due to
rural geography.
ICBA looks forward to continuing
discussions with the CFPB to properly
frame the issues that determine
access to credit in rural America.
Community banks play a crucial role
in sustaining the viability of rural
America and serving its credit needs,
and ICBA is dedicated to ensuring the
role of community banks is properly
communicated to policymakers so
community banks can remain viable
and compete on a level playing fi eld. 
Mark Scanlan (mark.scanlan@
icba.org) is ICBA's senior vice
president of agriculture and
rural policy.
independentbanker.org Q 49
http://www.independentbanker.org
Independent Banker - November 2022

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