[Congressional Record Volume 160, Number 115 (Tuesday, July 22, 2014)]
[Senate]
[Page S4708]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. LANDRIEU:
  S. 2641. A bill to amend the Truth in Lending Act to provide that 
residential mortgage loans held in portfolio qualify and qualified 
mortgages for purposes of the presumption of the ability to repay 
requirements under such Act, and for other purposes; to the Committee 
on Banking, Housing, and Urban Affairs.
  Ms. LANDRIEU. Mr. President, I come to the floor today to discuss the 
importance of community banks to our financial system and economy. 
Community banks are critical to the economic recovery and success of 
our local economies and small businesses. As our Nation continues to 
recover from the worst recession since the Great Depression, we need to 
do everything possible to provide measured, targeted regulatory relief 
for community banks, who were not part of the problem during the 
financial crisis.
  America's nearly 7,000 community banks are the primary source of 
lending for our Nation's small businesses and farms. Though they 
compose just 10 percent of the banking industry by assets, community 
banks make over 57 percent of outstanding bank loans to small 
businesses. In Louisiana, we have approximately 140 community banks. 
These institutions are vital parts of their local communities; their 
boards are often made up of local citizens who are personally invested 
in advancing the interests of the towns and cities in which they live.
  Today I am offering a very simple, common sense provision that would 
cut back on some of the onerous regulations community banks are facing 
without compromising the safety and soundness of our financial system 
or important consumer protections. The Consumer Financial Protection 
Bureau, CFPB, released its final rule on consumers' ability to repay 
mortgage loans under Dodd-Frank in January 2013. The final rule, 
implemented in 2014, defines the qualities of a ``qualified mortgage'', 
QM, which presume that the lender has satisfied the ability to repay 
requirements. While I was encouraged by many aspects of the rules, I 
feel there is more to be done to ensure that community banks and Main 
Street lenders are not stifled by onerous regulations.
  My bill will allow any residential mortgage held in portfolio by 
lenders with less than $10 billion in total assets to qualify as a 
``qualified mortgage.'' A strong indication of a bank's view of the 
credit risk of a loan is the decision to hold a loan in portfolio. When 
a bank holds a loan in portfolio, rather than selling in on the 
secondary market, it assumes 100 percent of the credit risk, so it has 
the incentive to ensure that each and every loan is well underwritten 
and affordable to the borrower. Community banks are in the business of 
knowing their borrowers, understanding their ability to repay and 
structuring loans accordingly. This protects the financial health of 
borrowers, lenders, and the economy as a whole.
  I am proud to also serve as a cosponsor of S. 1349, the Community 
Lending Enhancement and Regulatory, CLEAR, Relief Act, which was 
introduced by my colleagues, Senators Moran and Tester and contains a 
number of other regulatory relief measures for small and community-
based lenders. I encourage my colleagues to support these provisions to 
help community banks serve their customers, protecting the well-being 
of borrowers, and spur economic growth in local communities across the 
Nation.
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