The Federal Savings Association Charter Flexibility Act was introduced to Congress last week, aiming to make it easier for federal savings associations to change charters and broaden their services under the Home Owners Loan Act (HOLA).
The House bill was sponsored by Reps. Keith Rothfus
(R-PA) and Jim Himes (D-CT). The Senate bill was introduced by Sens. Heidi Heitkamp (D-ND) and Jerry Moran (R-KS).
Under HOLA, mutual savings banks, cooperative banks, and other similar institutions must undergo an detailed process to change charters in order to offer a broader range of services similar to a national bank.
The new legislation establishes a simple election process for such an institution to become a newly-created Covered Savings Association. It also includes safeguards to prevent fire sales of assets and subsidiaries during the transition process while also preserving the ability of the Office of the Comptroller of the Currency (OCC) to enforce the law and prevent evasion.
“This bill ensures that institutions that have played a vital role in their communities for generations will be able to grow and evolve to serve their customers for years to come,” Rothfus said. “Small business owners, entrepreneurs, and families rely on their services to conduct their everyday business, which is why this proposal has bipartisan support in both the House and Senate and the backing of the OCC.”
Rothfus and Himes introduced identical legislation during the last Congress, which passed the Financial Services Committee by voice vote.
“Allowing them to expand the way they serve their communities will give Americans the option of using an already trusted institution for commercial or consumer loans as well,” Himes said. “By easing the process through which they can offer a broader array of services, this legislation will create value for families and businesses.”
The American Bankers Association (ABA), long-standing champions of creating greater flexibility for HOLA chartered institutions, endorsed the bill.
“These bills are the epitome of sensible regulatory relief. They will allow mutual and stock savings associations chartered under the Home Owners Loan Act to better serve the needs of their communities without having to go through lengthy and costly charter conversions,” Robert Davis, executive vice president of mortgage markets, financial management and public policy at ABA, said.
He said the proposal is modeled on an approach used by U.S. Comptroller of the Currency Tom Curry when he was the commissioner of banking in Massachusetts.
“The legislation will allow a federal savings association to elect to function as, and be regulated like, a national bank without having to change charters or governance structure,” Davis said. “The OCC regulates both national banks chartered under the National Bank Act and federal thrifts chartered under the Home Owners Loan Act, and thus has expertise in regulating both types of institutions.”