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Supreme Court overrules Chevron doctrine, limiting agency discretion to interpret laws

In a major administrative law decision, the Supreme Court overturned the Chevron doctrine, which requires federal courts to defer to agencies’ reasonable interpretations of ambiguous statutes.

Background: For 40 years, so-called “Chevron deference”—established by the 1984 Chevron v. National Resources Defense Council decision involving the Clean Air Act—has facilitated broad agency discretion in rulemaking.

Court Ruling: In the 6-3 decision in Loper Bright Enterprises v. Raimondo, the majority held that Chevron deference to regulatory agencies defies the Administrative Procedure Act that governs them. In the landmark opinion, the Supreme Court held that:

• The Administrative Procedure Act “requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of law simply because a statute is ambiguous.”
• Agencies have no “special competence” in resolving statutory ambiguities, which should be left to the courts.

Regulatory Impact: The court ruled that the decision does not call into question prior cases that relied on the Chevron framework. But the ruling likely will lead to legal challenges to regulations that depend on administrative interpretations of federal laws, with courts now wielding more authority to invalidate regulatory actions that are inconsistent with statutory authority and the Administrative Procedure Act.

ICBA Action: ICBA recently filed two complaints in federal court challenging the Consumer Financial Protection Bureau’s 1071 small-business final rule and the FDIC, OCC, and Federal Reserve’s final rule on Community Reinvestment Act modernization. In both lawsuits, ICBA has alleged the agencies exceeded their statutory authorities and that the final rules are arbitrary and capricious under the Administrative Procedure Act.

ADVOCACY

IRS finalizes ICBA-backed reporting rules for digital asset brokers

The Treasury Department and IRS released a final rule establishing reporting requirements for brokers of digital assets with ICBA-advocated provisions to promote a level playing field.

Rule Details: The final rule:

• Implements a provision of the Infrastructure Investment and Jobs Act that amended the definition of a “broker” subject to information reporting requirements to include individuals who effectuate digital asset transfers.
• Includes stablecoins in the definition of digital assets, as advocated by ICBA.
• Includes digital assets in securities definitions, as supported by ICBA.
• Enacts an ICBA recommendation to expressly limit the definition of digital assets to only those digital assets that function as currency or that have the capability of being purchased, sold, or exchanged.
• Rejects ICBA-opposed efforts to exempt non-custodial industry participants, which would have excluded decentralized finance exchanges from the requirements.
• Says new rules for DeFi exchanges and other non-custodial industry participants will be released later this year.
• Will require brokers to report gross proceeds on the sale of digital assets beginning in 2026 for all sales in 2025.
• Will require brokers to also report information on the tax basis for certain digital assets beginning in 2027 for sales in 2026.

Impact: The rule is designed to align digital asset brokers’ reporting requirements with longstanding reporting requirements for traditional financial services. In releasing the rule, Treasury said:

• Crypto owners have always owed tax on the sale or exchange of digital assets, and the rule did not change that.
• Rather, the rule created reporting requirements, similar to those that already applied to traditional financial services, to help taxpayers file accurate returns and pay taxes owed under current law.

ICBA Comments: In a comment letter last fall, ICBA said the rule:

• Helps to provide taxpayers with relevant information and clarifies reporting requirements for digital assets brokers.
• Promotes a level playing field by applying comparable information reporting requirements to brokers of digital and traditional assets.
• Properly defines digital assets brokers to include decentralized finance exchanges and decentralized autonomous organizations.

ICBA Advocacy: In a separate comment letter earlier this year, ICBA said recordkeeping and reporting requirements on crypto transactions are not enough to adequately protect U.S. consumers and businesses. ICBA also supports global efforts to advance international crypto asset regulation, including the International Organization of Securities Commissions’ baseline policy recommendations.

FinCEN proposes rule to strengthen AML/CFT requirements

The Financial Crimes Enforcement Network issued a proposed rule to strengthen anti-money-laundering and countering-the-financing-of-terrorism requirements.

Details: The proposed rule would:

• Amend program rules to require financial institutions to establish, implement, and maintain effective, risk-based, and reasonably designed AML/CFT programs with certain minimum components, including a mandatory risk assessment process.
• Require financial institutions to review government-wide AML/CFT priorities and incorporate them, as appropriate, into risk-based programs, as well as provide for certain technical changes to program requirements.
• Promote clarity and consistency across FinCEN’s program rules for different types of financial institutions.

Banking Agency Proposal: The proposal follows last week’s proposed rule from federal banking regulators that would amend AML/CFT requirements to align with FinCEN’s proposed changes under the Anti-Money Laundering Act of 2020.

ICBA View: In a 2022 comment letter, ICBA laid out its plan for FinCEN to modernize its BSA framework. ICBA urged the agency to raise Suspicious Activity Report and Currency Transaction Report thresholds and withdraw bank beneficial ownership collection and verification requirements, among other recommendations to alleviate compliance burdens while producing more useful information for law enforcement.

Enter the recreational vehicle lending market on your own terms

Set your minimum lending requirements and maximum financing amounts to ease into recreational vehicle lending at your own pace. Learn more.

INNOVATION

ICBA Services Network appoints Shon Myers chairman

ICBA Services Network, the business-services subsidiary of ICBA, announced the election of Shon Myers as chairman of the board of directors.

Details: Myers is chairman, president and CEO of Farmers & Merchants Bank in Miamisburg, Ohio. He serves on the ICBA Executive Committee, board of directors, Federal Delegate Board, and Policy Development Committee, and is past chairman of ICBA’s Political Action Committee.

More: Joining Myers on the board are:

• Robert Fisher, chairman and president of Tioga State Bank in Spencer, N.Y.
• Sarah Getzlaff, CEO of Security First Bank of North Dakota in Bismarck, N.D.
• Chris Moya, president and CEO of the Independent Community Bankers Association of New Mexico.

Best Community Banks to Work For nominations due this week

Nominations for Independent Banker magazine’s 2024 Best Community Banks to Work For awards are due this week.

Background: Sponsored by FIS, the awards elevate community banks that support their communities, employees, and customers. Winning banks will be recognized in the December issue of Independent Banker, at the 2025 ICBA LIVE annual convention, and through other ICBA channels.

Deadline: Eligible community banks must submit nominations by 11:59 p.m. (Eastern time) this Friday, July 5.

Methodology: Once nominated, full-time employees of each nominated bank will be asked to complete a comprehensive workplace survey in August. Banks in five asset categories with the highest index scores will be selected as winners. Submit nominations.

New webpage shows impact of ICBA's innovation investment

ICBA Innovation launched a webpage to highlight ICBA’s investment in innovation for community banks.

Highlights:

• 1,250 bankers from 885 community banks participated in year-round innovation programming in 2023.
• 88% of members reported being likely to rely on ICBA products and solutions.
• 92% of all ICBA member banks use at least one ICBA Preferred Service Provider.
• ICBA’s newly updated Solutions Directory, an exclusive member benefit, garnered 37,000 views from 5,000 users.
• 21 ICBA Preferred Service Providers offered 66 unique solutions.

Rate limbo: why banks need rate-agnostic growth strategies

As interest rates linger at elevated levels, modern banks must adopt rate-agnostic strategies focusing on building customer relationships. Life events present banks with opportunities to engage customers at the moments that matter. Total Expert can help banks anticipate these events and engage customers to increase trust and loyalty.

EDUCATION

Seminar on distressed loan management to be held next month

ICBA’s Identifying and Addressing Distressed Loans Seminar will take place virtually on Thursday, Aug. 1.

Details: The livestream seminar ensures participants can spot early warning indicators and develop action plans to minimize bank losses. It will cover liquidity versus solvency issues, management and industry strength, and the COVID-19 impact on credit risk. Learn more and register.

Registration open for August CFO Forum

ICBA’s CFO Forum will be held in person Aug. 26-27 in Indianapolis.

Details: Participants will tackle the top issues facing today's CFO, including emerging tax and accounting strategies, managing credit risk, cybersecurity hot topics, dealing with distressed borrowers, and more. Register now for preferred pricing.

Compliance question on the BSA/AML Travel Rule

The ICBA Compliance Center Question of the Week page features a new Q&A about applying the BSA/AML Travel Rule.

Archive: The latest update to ICBA’s Question of the Week archive follows last week’s Q&A on the Telephone Consumer Protection Act.

Vault: More is available on ICBA’s Compliance Vault, a search tool that features more than 2,500 Q&As.

Ransomware mitigation strategies for community banks

Ransomware attacks are constantly evolving and becoming more sophisticated, posing a growing threat to community banks. It's essential for banks to stay informed and proactive in safeguarding their data and systems. Learn about how ransomware is delivered and discover effective strategies to mitigate these risks. Read more.

NOTED

FDIC announces relief for severe weather, fires in Iowa, N.M.

The FDIC announced regulatory relief to facilitate recovery in areas of Iowa affected by severe storms, flooding, straight-line winds, and tornadoes, and to areas in New Mexico affected by fires. The agency is encouraging banks to work constructively with borrowers experiencing difficulties beyond their control because of damage caused by the severe conditions.

Personal income, spending increased in May

Personal income increased 0.5% in May and consumer spending increased 0.2%, according to the Commerce Department. The PCE price index, a key inflation gauge, decreased less than 0.1% in May and is up 2.6% from a year ago, down from 2.7% in April.

Consumer sentiment drops slightly in June

Consumer sentiment dropped 0.9% in the past month but was up 6.2% for the past year, according to the University of Michigan index. Year-ahead inflation expectations fell from 3.3% last month to 3.0% this month.

Top hit on ICBA Community: Best Community Banks to Work For awards

The most popular post on ICBA Community is in the Banker Central group and concerns participating in the Best Community Banks for Work For awards process. Join the conversation.

Worth Sharing

LBA @LABankers: Congratulations to Jayce Simpson of Community Bank of Louisiana on being named an Independent Banker Magazine's 40 Under 40: 2024's Community Bank Leaders!

Brad Bolton @BradMBolton: Consumers are harmed every time a tax subsidized credit union acquires a community bank or community bank branch! #SomethingsWrong #UnEqual #UnLevel financial landscape!

Fraud is the latest subgroup on the ICBA Community online platform. Join the conversation.

Smarter deposit pricing: the power of relationship modeling

Discover practical strategies for smarter, more competitive deposit pricing in our latest Industry Insights paper. We explore the role of relationship modeling in navigating fluctuating deposit rates and identifying your most profitable customers. Download now for actionable insights!

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