Republican-led legislation that would reduce and modify banking regulations, including those regarding institution formation, supervision by federal financial regulators, and bank merger requirements, received approval July 21 by the U.S. House of Representatives, which voted 270-155 to advance the measure to the U.S. Senate.
The Main Street Capital Access Act, H.R. 6955, which 29 GOP members introduced on Jan. 7 alongside bill sponsor U.S. Rep. French Hill (R-AR), is a community banking package that aims to revitalize local bank formation and ensure that community lenders can focus on serving families, small businesses, and local economies.
“As a former community banker in central Arkansas, I know how important our Main Street banks are to our local economy,” said Hill, chairman of the U.S. House Financial Services Committee. “Whether a young couple wants to open a coffee shop in downtown Little Rock, a local manufacturer is looking to expand in Jacksonville, or a farmer in White County needs a loan for a new combine, it’s our local banks that step up.”
Under the bill, new banks would have a three-year phase-in period to meet certain capital requirements. The bill also would reduce the leverage ratio for certain rural community banks, according to the Congressional Record bill summary.
H.R. 6955 also would require financial regulators to tailor regulatory actions to limit burdens on financial institutions and to consider the institutions’ risk profiles and business models. They also would have to review their regulations more frequently and expand the scope of these reviews.
Additionally, the bill would ease requirements regarding bank mergers, for example, by allowing financial regulators to approve certain bank mergers without considering if the merger is noncompetitive or monopolistic, the summary says.
If enacted, H.R. 6955 also would increase the dollar asset thresholds for various fees, reporting requirements, and other regulatory requirements so that more financial companies and banks are exempt from these requirements.
For example, the bill would increase the total asset threshold above which financial holding companies need Federal Reserve Board approval to acquire a company, thereby allowing for more acquisitions without board approval.
The bill also would increase certain asset thresholds so that additional small bank holding companies are allowed to operate with higher debt levels, and it would provide flexibility regarding the use of reciprocal deposits, the resolution of failed banks, and other regulated activities, states the summary.
More than 100 entities support the measure, which on July 22 was received in the Senate and referred to the U.S. Senate Banking, Housing, and Urban Affairs Committee for action.
“The Main Street Capital Access Act is an important step toward modernizing the bank regulatory and supervisory framework to ensure financial institutions can better meet the needs of their customers, clients, and communities while driving economic growth,” said Rob Nichols, president and CEO of the American Bankers Association.
Rebeca Romero Rainey, president and CEO of Independent Community Bankers of America (ICBA), commended House passage of the Main Street Capital Access Act, which she said includes policies that will transform the regulatory environment to support community banking and economic growth in rural, suburban, and urban markets.
“We… encourage the Senate to take up and pass this measure to amplify the value that community banks bring to local economies nationwide,” she said.
In addition, numerous organizations have also expressed support for the bill, including the U.S. Chamber of Commerce, America’s Credit Unions, the American Fintech Council, the Community Development Bankers Association, and the Bank Policy Institute, among many others.