Promoting New and Diverse Depository Institutions Act
Floor Speech
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Mr. HILL. Madam Speaker, I yield myself such time as I may consume.
Since the Dodd-Frank Act was enacted, the number of community financial institutions has steadily declined. Republicans know this trend is due to increased regulatory and compliance burdens banks and credit unions face that inhibit their ability to survive, let alone, thrive. Republicans have consistently pushed for regulatory rightsizing including tailoring regulation, not imposing one-size-fits-all requirements.
H.R. 4950 directs the banking agencies to study ways to promote the establishment of new banks and credit unions, including community development financial institutions, CDFIs, and minority financial institutions.
This bill requires the banking agencies to report to this body, the Congress, on challenges faced by proposed depository institutions and to develop a strategic plan to promote establishment of new financial institutions.
The banking agencies will provide the Congress with recommendations on how best to propose financial institutions and help them navigate that regulatory process.
H.R. 4950 is a first step toward identifying and addressing the challenges posed to the chartering of new banks and credit unions.
The fact is, Madam Speaker, encouraging the establishment of de novo financial institutions will help fill the needs left by bank consolidations and bank closures over the past decade. This will increase banking options and competition to better serve families, small businesses, and our local communities. The loss of local banks and credit unions has disproportionately affected rural communities.
Republicans support efforts to better understand the challenges that prospective de novo depository institutions face and identifying the solutions to promote a greater number of new charters.
I urge my colleagues to support this bill, and I reserve the balance of my time.
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Mr. HILL. Madam Speaker, let me thank my friend from Massachusetts for his passion on this. I spent the better part of half of my career in community banking, and I know the consolidation, how it has impacted, particularly, rural counties that no longer have a banking office.
And I also know how the regulatory burden has raised the immense costs of trying to form a new de novo banking corporation. It is just putting it out of reach of many, many groups of civic leaders, entrepreneurs, local people and, certainly, those trying to form a minority depository institution, or a CDFI.
So I commend my friend from Massachusetts for his work on this bill. It does have bipartisan support. I urge my colleagues to support it.
In conclusion, Madam Speaker, I include in the Record a letter to the Speaker and the minority leader, in addition to the chair and ranking member of the House Financial Services Committee from the Independent Community Bankers of America expressing their full support of H.R. 4590. Independent Community Bankers of America, July 26, 2022. Re Support for the Promoting New and Diverse Depository Institutions Act (H.R. 4590). Hon. Nancy Pelosi, Speaker, House of Representatives, Washington, DC. Hon. Maxine Waters, Chairwoman, Committee on Financial Services, House of Representatives, Washington, DC. Hon. Kevin McCarthy, Minority Leader, House of Representatives, Washington, DC. Hon. Patrick McHenry, Ranking Republican, Committee on Financial Services, House of Representatives, Washington, DC.
Dear Speaker Pelosi, Minority Leader McCarthy, Chairwoman Waters, and Ranking Member McHenry:
On behalf of community banks across the country, with nearly 50,000 locations, I write to thank you for scheduling floor consideration of the Promoting New and Diverse Depository Institutions Act (H.R. 4590), sponsored by Rep. Jake Auchincloss, and to express our support for this legislation. ICBA urges all Members of the House to vote YES on H.R. 4590.
The Promoting New and Diverse Depository Institutions Act requires the Federal banking regulators to conduct a joint study to assess the challenges faced by proposed depository institutions, including proposed minority depository institutions (MDIs), seeking de novo depository institution charters and to provide legislative recommendations to help these proposed institutions successfully obtain charters. There has been a dearth of de novo charters in the past decade. An infusion of new charters is needed to offset consolidation in the banking sector and create a competitive landscape that will benefit consumers and small businesses alike. Notably, new community bank charters, including new MDI charters, are needed to provide access to capital and banking services that play a pivotal role in reaching unbanked populations and underserved communities across the nation.
Concrete, actionable proposals are needed to turn the tide of stagnant de novo bank formation. ICBA supports an array of measures, such as phasing in capital standards for de novo banks over a period of three years and allowing for greater flexibility to modify the de novo business plan as conditions warrant. Start-up capital is often the greatest impediment to forming a new bank, and these provisions, among others, would help spur the creation of de novo charters, including MDIs.
Thank you for your consideration. ICBA looks forward to working with you to advance H.R. 4590 into law. Sincerely, Rebeca Romero Rainey, President & CEO.
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Mr. HILL. Madam Speaker, I yield back the balance of my time.
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