Making Banking Great Again starts with community banks

In today’s political climate, it’s rare to find consensus. But on Capitol Hill, one area of bipartisan agreement is beginning to take shape: support for our nation’s community banks. Six recent bills advanced by the House Financial Services Committee demonstrate a thoughtful and measured approach to modernizing banking regulations, focusing on making it easier for community banks to operate. Together, they represent a significant shift toward making our financial system more responsive, efficient and fair, especially for the small and mid-sized institutions that form the backbone of local economies..Legislation that makes it easier for community banks to protect themselves as well as depositors is a win/win. These bills accomplish that by reducing regulatory bloat that has long stifled smaller institutions without weakening the framework that safeguards customer funds. In fact, many of the proposed changes improve the transparency and accountability of oversight, giving banks and examiners clearer expectations and the public more confidence in the process.Let’s be clear: community banks are not asking to play by different rules. They’re asking for rules that reflect the scale and risk profile of their operations. Applying the same standards to a $300 million rural bank as a $3 trillion megabank is both inefficient and harmful. It drives up compliance costs, discourages innovation, and pushes consolidation, leading to fewer choices for consumers and businesses.The six bills advanced this session are designed to correct these misalignments.The Bank Failure Prevention Act (H.R. 1900) is perhaps the most misunderstood. Critics argue it weakens oversight of bank mergers, but that’s not accurate. This bill streamlines the merger review process, making it timelier and more transparent. Today, regional banks looking to merge face long, opaque review periods that put deals at risk and slow down much-needed consolidation in underserved areas. This bill would encourage responsible mergers that strengthen banks’ ability to compete and serve their communities.The TAILOR Act (H.R. 3380) addresses another long-standing issue: one-size-fits-all regulation. Smaller banks, often serving rural or niche markets, operate with less complexity and lower risk than their large national counterparts. Imposing the same compliance burdens on both doesn’t make the system safer, it only makes it harder for community banks to survive. By right-sizing regulation based on actual risk, the TAILOR Act protects depositors and ensures that communities don’t become banking deserts.The FIRM Act (H.R. 2702) aims to create a standard for bank exams that supports fair supervision. It removes the vague “reputational risk” measure from bank exam criteria. While banks must still follow all laws regarding creditworthiness, AML compliance, and sanctions, they should not be penalized based on politics or social perception. Whether it’s the firearms industry, crypto, or any other legal business, regulators should not pressure banks to cut ties based on arbitrary standards. This bill reaffirms that banks exist to serve lawful customers and communities. It should also be noted that banks will not be — and are not going to be required to — provide an account to anyone that poses a risk to their business based on objective assessment criteria.The HUMPS Act (H.R. 3379) goes a step further in eliminating subjectivity. It clarifies expectations for the “Management” component of CAMELS ratings, ensuring banks are not downgraded for ill-defined or inconsistent reasons. Community banks, which often rely on close-knit leadership teams and lean staffing, are especially vulnerable to the consequences of these downgrades. This bill restores fairness and consistency to the supervisory process.The Financial Institution Regulatory Tailoring Enhancement Act (H.R. 3230) updates outdated asset thresholds that determine regulatory burdens. Since the 2008 crisis, inflation and industry growth have left the $10 billion benchmark too low. Raising this to $50 billion brings thresholds in line with economic reality and ensures that the smallest players aren’t weighed down by rules intended for much larger institutions.Finally, the FAIR Exams Act (H.R. 940) would make the examination and appeals process more transparent, giving banks a clearer path to challenge examiner findings and seek fair outcomes. An independent review process and clearer timelines are not just good for banks, it’s good for the financial system as a whole. When banks understand the rules and can hold regulators accountable to them, everyone wins.None of these bills roll back the critical reforms enacted after 2008. They do not dismantle consumer protections, enable risky behavior, or create loopholes for bad actors. On the contrary, they modernize the regulatory process in ways that make it more risk-sensitive, less politicized, and more responsive to the needs of real-world institutions. They let bankers focus on banking and on serving the depositors. Our community banks are the backbone of this nation and serve small businesses, churches, nonprofits, and everyday Americans.Smart policy recognizes that strength comes not just from strict rules, but from fair ones. At Ampersand, we believe in a banking system that protects deposits and fosters innovation, competition, and service. The legislation advanced by House Financial Services this year gets us closer to that goal. Let’s support our community banks and help create a fair framework for them to operate in. The communities they serve are counting on it.Kelly Brown is chair and CEO of Milwaukee-based financial services firm Ampersand, Inc.