Supervisory Modifications for Appropriate Risk-Based Testing Act of 2025

Floor Speech

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Mr. FOSTER. Mr. Speaker, I rise in support of the bipartisan Supervisory Modifications for Appropriate Risk-based Testing Act, or SMART Act, which provides thoughtful examination relief to qualifying community banks and credit unions, while maintaining appropriate safeguards.

Specifically, the SMART Act allows community banks and credit unions with fewer than $6 billion in assets to qualify for alternating full- and limited-scope examinations, provided that their prudential regulator gave them a strong review at their last full-scope examination, that they are not subject to an enforcement action, and that they have not recently merged, which often can be a challenging time for recently merged institutions.

If they meet these criteria, qualifying banks and credit unions may also request that regulators combine certain types of exams so they can take place at the same time. Many employees of the smallest firms wear multiple hats and have daily duties outside of the examination process.

This provision allows firms with a strong track record to better coordinate with regulators and spend more time working with the communities that they serve. It will also provide regulatory staff with greater flexibility to focus their limited resources on poorly rated institutions that need greater oversight.

I reemphasize that this bill includes important safeguards that accompany this added flexibility.

As I have mentioned, the relief provided in this bill will only be available to well-managed and well-capitalized community banks and credit unions with fewer than $6 billion in assets that are in good standing with the regulatory agency, and the regulators will always be able to step in if there is a threat to the stability of a covered institution.

Finally, this legislation is a step toward the future of bank regulation which will rely, we hope, less on high-stakes, in-person examinations and more on automated electronically driven inspections that happen on a more continuous basis to deal with the challenges of the coming agentic world in finance.

Mr. Speaker, I am happy to co-lead this legislation, and I thank Mr. Timmons for his partnership on this bill. I encourage my colleagues to vote ``yes.''

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