News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

For Immediate Release
May 3, 2007

CONTACT: Kate Gilman/ Austin Bonner,  (202) 225-4038

White House Vetoes Relief for Community Banks

Key Measures of Communities First Act Included in Supplemental

WASHINGTON – Last night, with the veto of H.R. 1591, U.S. Troop Readiness, Veterans' Health, and Iraq Accountability Act, 2007 and its funding for the war in Iraq, the White House also rejected provisions that would have provided relief to community banks and enabled them to better serve their communities nationwide.

“It is extremely disappointing to see that President Bush has made the decision to veto this legislation,” Chairwoman Nydia M. Velázquez said.  “Not only did it include key provisions for the war in Iraq, but it also included vital relief for community banks that would have stimulated economic growth in underserved areas across the country.  This is not the message to be sending to the American people at a time when relief is needed here in the U.S. economy and overseas.”

The supplemental spending bill included small business subchapter S reforms, providing tax relief for community banks. The changes would have ensured that small lenders could focus on growing and expanding their enterprises.  However, the President’s move to veto the bill further stalls the implementation of these key provisions that would bolster the ability of community banks to spur economic development in their local communities.

“With the increasing demand for the services provided by our community banks, we must ensure that we are doing all we can to help them serve their local communities,” Chairwoman Velázquez said. “The provisions the president vetoed today would have been a first step in that direction.  These reforms would have ensured community banks are able to meet the needs of local business owners and promote further job creation.”

The requirements for community banks were part of H.R. 1869, The Communities First Act, which included measures to assist consumers, small businesses, and community banks. The legislation reduces paperwork requirements, updates loan limits, and requires that future changes to banking regulations and guidelines account for their impact on community banks. It also exempts institutions with fewer than $1 billion in deposits from Sarbanes-Oxley 404 reporting requirements and includes tax and regulatory changes that benefit consumers and small businesses directly. H.R. 1869 reduces the tax rate for interest earned through certificates of deposit. It also creates a “Young Savers” account with features similar to a Roth IRA to encourage greater saving among individuals at an earlier age.  The act will encourage more lending in rural areas by providing tax benefits for agricultural real estate loans and mortgage loans in communities of 2,500 people or less. These reforms will make community banks’ national reach, local ties, and emphasis on small business and farm lending available to more customers in more areas.

 “It is my hope that the president will reconsider the decisions he has made, and work with Congress to implement these measures – as well as the broader legislation – into law,” said Chairwoman Velázquez. “I urge the president to re-examine these options and put better banking tools in the hands of consumers, small businesses, and community banks.”

H.R. 1869 continues the committee’s efforts to expand access to capital for entrepreneurs. Last month, the committee reported H.R. 1332, the Small Business Lending Improvements Act of 2007, a bipartisan bill that reduces the cost of 7(a) and makes improvements to the 504 loan program. The legislation passed the House on April 25.

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