Adopt amendments and provisions to existing banking laws to ease regulations for community banks?
H.R. 6955 modifies many banking regulations, including a three-year phase-in period for new banks to meet requirements to prevent bankruptcy, making the community development financial institutions (CDFI) program funds more transparent, and guaranteeing that these bonds are a sustainable source of long-term capital. It also reduces the requirement for the community bank leverage ratio, which makes community bank lending operations easier. The bill recommends revising or eliminating the management component of the CAMELS (Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk) ratings system. Timeliness of examination reviews and private letter rulings for federal financial institutions and supervisory modifications for risk-based testing are also considered. It also aims to strengthen local bank funding through reviewing the effectiveness of discount window operations in providing liquidity and emerging technologies in relation to such operations, among other considerations. Additionally, the bill eases requirements for mergers as it does not consider whether mergers with combined assets of less than $10 billion are monopolies, among other provisions.
Sponsor: Rep. J. French Hill (Republican, Arkansas, District 2)
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Opponents say
• "Instead of focusing on helping our community banks and credit unions, there's a wide range of sweeping deregulatory provisions which would benefit not only mega banks but also undermines the Consumer Financial Protection Bureau. Indeed, this so-called Main Street Capital Access Act appears to be the most sweeping form of bank deregulation since before the 2008 global financial crisis. In the nearly two decades since that crisis, we've learned a great deal about how to maintain a resilient financial system in the face of many obstacles, including through the pandemic. But this package ignores those lessons and will not only significantly roll back safeguards and oversight of the largest banks but also undermines consumer protections and anti-discrimination measures. Importantly, while the nation grapples with an affordability crisis and surge in financial scams and fraud, costing consumers tens of billions of dollars, this package would hamper the CFPB's ability to issue any new rules undercutting the very agency Congress established to combat financial abuses and empower consumers to protect their finances. At a time when the Trump administration has largely shut down the CFPB and this committee has failed to fulfill our statutory duty to have acting director vote testify. The last thing we should be doing is undermining the CFPB any further. Furthermore, this bill ignores the lessons from the failure of Silicon Valley Bank and other regional banks, which failed a few years after Congress roll back enhanced credential standards on these banks. Instead, this bill lets even more of these regional banks escape critical safeguards that promote safety and sound. The so-called Main Street Capital Access Act falls well short of what we know can be done on a bipartisan basis to promote, preserve, and enhance access to banking services for Main Street communities." Source: Rep. Maxine Waters (Democrat, California, District 43)
• "NCRC opposes The Main Street Capital Access Act (H.R.6955), which is an omnibus bill that includes many poison pill provisions that would weaken meaningful public participation and accountability, hamstring prudential supervision and tilt the playing field for banks at the expense of consumers and LMI communities. We especially oppose provisions in H.R. 6955 that would fast track mergers while disregarding community input, remove anti-trust review for 97% of bank applications, and make bank consolidation easier." Source: National Community Reinvestment Coalition (NCRC)
Proponents say
• "This is a long-overdue reform package. Ten years ago, America had more than 6,100 community banks. Today, we’re down to fewer than 4,000. That decline means less access to capital for small businesses, fewer loans for farmers, fewer options for homebuyers, and fewer financial services for working families. The Main Street Capital Access Act reverses that trend by strengthening community banks, restoring local lending, and making sure capital flows where it belongs: back to Main Street. As Chairman of the Subcommittee on Oversight and Investigations, we proved debanking was real, coordinated, and wrong. The debanking report didn’t just diagnose the problem, it laid out solutions. Key legislative recommendations in the debanking report are part of this comprehensive package to make sure no American is ever cut off from the financial system again." Source: Rep. Dan Meuser (Republican, Pennsylvania, District 9)
• "The Bank Policy Institute (BPI) is writing in support of the Main Street Capital Access Act, which incorporates a series of critical reforms to rationalize the banking system’s regulatory framework and promote responsible and expanded access to credit across the U.S. economy. This legislation thoughtfully advances many provisions that BPI has previously supported and that enjoy broad industry backing as well as bipartisan support. These include measures that tailor regulation to a firm’s size, risk and business model; streamline supervisory processes to ensure fair and predictable oversight; and modernize the merger review framework to reflect today’s competitive financial landscape. Taken together, these reforms will help ensure that the banking agencies can direct regulatory efforts where they are necessary, while freeing up banks to serve their communities and Main Street businesses nationwide. In particular, BPI commends the inclusion of provisions that: realign regulatory tailoring to right‑size capital, liquidity and risk management requirements with the size and complexity of an institution as well as update regulatory tailoring thresholds set in S. 2155 to account for economic growth; promote greater transparency and accountability in bank supervision, including improvements to the MRA/MRIA process and the CAMELS rating system as well as ending the use of reputational risk by bank examiners; advance stress testing reforms by directing the Fed to make scenario design and modeling assumptions subject to notice and comment, and thus make them more transparent and accurate; and update bank merger review standards to ensure consistency with the requirements of the law as well as providing fairness and timely decision‑making for bank merger applicants. These reforms are essential to supporting a vibrant, competitive and innovative banking sector—one that can continue providing affordable credit for consumers and the long‑term investment needed for economic growth." Source: Bank Policy Institute
• "ICBA strongly supports the Main Street Capital Access Act, which includes policies that will transform the regulatory environment to support community banking and economic growth in rural, suburban, and urban markets. We encourage the full House to take up and pass this critical legislation to amplify the value that community banks bring to local economies nationwide. The Main Street Capital Access Act includes ICBA-supported provisions to tailor regulations to the lower risk profile of community banks, ease excessive capital requirements, support the formation of new community banks, ensure fair reviews of agency examinations, support use of custodial and reciprocal deposits, require the appointment of an FDIC board member with experience in small depository institutions, modernize Federal Reserve's discount window lending programs, offer relief at the holding company level, promote bank-fintech partnerships, strengthen community development financial institution programs, and more." Source: Independent Community Bankers of America (ICBA)
- Chairman Hill and Financial Institutions Subcommittee Chairman Barr Unveil Community Banking Package (Press Release)
- US regulators propose overhaul to bank rating system (Reuters)
- Merger Review (Federal Trade Commission)
- CFPB Recent updates (Consumer Financial Protection Bureau)
- DOJ Subpoenas Big Banks for Alleged ‘Debanking’ (The Wall Street Journal)
- Rep. J. French Hill’s Largest Donors (OpenSecrets)
