House passes community bank reg relief bill

The House of Representatives passed a bill earlier this week that would ease requirements for de novo banks and reduce examination standards for many community financial institutions..The Main Street Capital Access Act passed the House by a 270-155 vote, and now heads to the Senate for possible approval. It would institute a three-year phase-in for de novo banks to meet federal capital requirements. The bill requires federal regulators to consider a bank’s size, business model and risk profile when making new regulations and supervisory decisions. Introduced earlier this year by House Financial Services Committee Chair French Hill (R-Ark.) and Financial Institutions Subcommittee Chair Andy Barr (R-Ky.), the bill would change the CAMELS rating system to eliminate perceived vague requirements such as reputational risk in examinations. The legislation also establishes 90-day deadlines for regulators to make merger and acquisition decisions and increases the threshold for eligibility for an 18-month examination cycle to $6 billion from $3 billion. The bill raises the asset threshold for the Federal Reserve’s Small Bank Holding Company Policy Statement to $25 billion from $3 billion and increases the Community Bank Leverage Ratio framework to $15 billion from $10 billion. The statutory Leverage Ratio range would drop to 6-8 percent from 8-10 percent. The leverage ratio is an optional framework adopted by the Federal Reserve, FDIC and Office of the Comptroller of the Currency to simplify capital requirements.