A housing bill with multiple regulatory reforms for community banks recently became law..The bill, which had passed the House and Senate by wide, bipartisan margins, went into effect July 11 as President Donald Trump did not sign it in the bill’s 10-day review period. He declined to sign the bill in protest over the Senate not passing the SAVE America Act, an unrelated election reform bill that would have required proof of citizenship to vote. The 21st Century ROAD to Housing Act includes numerous community bank provisions, including a 18-month examination cycle for banks with up to $6 billion in assets. The bill allows community banks to have more custodial deposits and reciprocal deposits without them being classified as brokered deposits. Other community bank provisions in the Senate bill include:Forming a Treasury Financial Agent program to spark partnerships between minority depository institutions, rural community banks and other financial institutions. Requiring federal banking agencies to review improving the profitability, capital adequacy and growth of rural banks.Preventing the Federal Reserve from issuing a central bank digital currency through 2030. The legislation streamlines the application process to spark de novo community bank formation and establishes a two-year pilot program to promote the formation of new banks, particularly in rural areas, by offering more flexibility in regulations, capital and lending.The 21st Century ROAD to Housing Act had shuffled between the House and Senate since the House passed the initial version in February, with the Senate passing its own, amended version in March. The House then approved an amended bill in May. Senate Banking Committee Chair Tim Scott (R-S.C.) called the legislation the most significant housing bill in decades, while Ranking Member Elizabeth Warren (D-Mass.) also supported the legislation. The American Bankers Association and Independent Community Bankers of America supported the bill. ABA President and CEO Rob Nichols said the law would promote a more tailored regulatory system for community banks.
