Bill Details
S.113 - 119th Congress
Status
Latest action
2025-01-16 - Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Introduced Date
2025-01-16
Policy Area
Finance and Financial Sector
Committees
View committees (1)
Cosponsors
View cosponsors (1)
7
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AI Summary This summary was generated by AI from the bill text. AI can get information wrong.
This bill would make it easier for new banks to get started and grow, especially in rural areas. It gives newly formed banks a 3-year period to gradually meet federal capital rules instead of having to meet them right away. It also gives rural community banks extra help by setting a special capital ratio during that same 3-year period. In addition, it would let new banks ask to change their approved business plans during the first 3 years, and regulators would have to respond quickly. The bill also expands agricultural lending options for federal savings associations and requires federal banking agencies to study why so few new banks have been formed and how to encourage more banks in underserved communities.
- New banks would have 3 years, starting when their FDIC deposit insurance becomes effective, to fully meet federal capital requirements.
- During that 3-year period, a new bank could ask to change its approved business plan, and regulators would have 30 days to approve, deny, or conditionally approve the request.
- If regulators do not act within 30 days, the change request would be treated as approved.
- Rural community banks would get a special community bank leverage ratio of 8% for 3 years, with the possibility of a gradual phase-in during the first 2 years. Federal savings associations would also be allowed to make agricultural loans, and banking agencies would have to study why new banks are so rare and report their findings to Congress within 1 year.
Official Summaries
Promoting New Bank Formation Act of 2025
This bill eliminates and reduces certain requirements applicable to new financial institutions, certain rural community banks, and federal savings associations.
Under the bill, federal banking agencies must issue rules allowing new financial institutions to meet capital requirements within three years. During this period, a financial institution may request to deviate from an approved business plan and the appropriate agency has 30 days to approve or deny the request.
In addition, the community bank leverage ratio—a way of evaluating debt levels—is reduced for new rural community banks. Specifically, new rural community banks must have a ratio of 8%, with a three-year phase-in of the rate. After this period, the ratio rises to its current level of 9%.
Finally, the bill removes certain restrictions to allow federal savings associations to invest in, sell, or otherwise deal in agricultural loans.
Current Full Text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 113 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 113
To require the appropriate Federal banking agencies to establish a 3-
year phase-in period for de novo financial institutions to comply with
Federal capital standards, to provide relief for de novo rural
community banks, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 16, 2025
Mrs. Hyde-Smith introduced the following bill; which was read twice and
referred to the Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To require the appropriate Federal banking agencies to establish a 3-
year phase-in period for de novo financial institutions to comply with
Federal capital standards, to provide relief for de novo rural
community banks, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Promoting New Bank Formation Act of
2025''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Trends in bank closures and consolidation have left
many communities without access to banking services and
disproportionately impact underserved rural and urban
communities.
(2) De novo bank formation has slowed significantly
following the financial crisis.
(3) A November 2019 report by the Federal Reserve System
found that 44 counties in the United States were ``deeply
affected'' by trends in bank closures and consolidation,
meaning that the counties had fewer than 10 branches in 2012
and lost not less than 50 percent of them by 2017.
(4) 89 percent of the deeply affected counties described in
paragraph (3) were rural.
(5) Rural counties deeply affected by branch closures had
higher poverty rates and lower median incomes, and a higher
share of their population were African-American compared to all
rural communities.
SEC. 3. DEFINITIONS.
In this Act:
(1) Appropriate federal banking agency; depository
institution; depository institution holding company.--The terms
``appropriate Federal banking agency'', ``depository
institution'', and ``depository institution holding company''
have the meanings given those terms in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813).
(2) Community bank leverage ratio.--The term ``Community
Bank Leverage Ratio'' has the meaning given that term under
section 201(a) of the Economic Growth, Regulatory Relief, and
Consumer Protection Act (12 U.S.C. 5371 note).
(3) Financial institution.--The term ``financial
institution'' means a depository institution or depository
institution holding company.
(4) Rural community bank.--The term ``rural community
bank'' means a financial institution--
(A) with total consolidated assets of less than
$10,000,000,000; and
(B) located in a rural area, as defined in section
1026.35(b)(2)(iv)(A) of title 12, Code of Federal
Regulations, or any successor regulation.
SEC. 4. PHASE-IN OF CAPITAL STANDARDS.
The appropriate Federal banking agencies shall issue rules that
provide for a 3-year phase-in period for a financial institution to
meet any Federal capital requirements that would otherwise be
applicable to the financial institution, where the 3-year period begins
on the date on which the deposit insurance that the financial
institution has obtained from the Federal Deposit Insurance Corporation
becomes effective.
SEC. 5. CHANGES TO BUSINESS PLANS.
(a) In General.--During the 3-year period beginning on the date on
which the deposit insurance that the financial institution has obtained
from the Federal Deposit Insurance Corporation becomes effective, a
financial institution may request to deviate from a business plan that
has been approved by the appropriate Federal banking agency by
submitting a request to the agency pursuant to this section.
(b) Review of Changes.--An appropriate Federal banking agency
shall, not later than the end of the 30-day period beginning on the
receipt of a request under subsection (a)--
(1) approve, conditionally approve, or deny the request;
and
(2) notify the financial institution of the decision and,
if the agency denies the request--
(A) provide the financial institution with the
reason for the denial; and
(B) suggest changes to the request that, if
adopted, would allow the agency to approve the request.
(c) Result of Failure To Act.--If an appropriate Federal banking
agency fails to approve or deny a request within the 30-day period
required under subsection (b), the request shall be deemed to be
approved.
SEC. 6. RURAL COMMUNITY BANK LEVERAGE RATIO.
(a) In General.--During the 3-year period beginning on the date on
which the deposit insurance that a rural community bank has obtained
from the Federal Deposit Insurance Corporation becomes effective, the
Community Bank Leverage Ratio for the rural community bank shall be 8
percent.
(b) Phase-In Authority.--The appropriate Federal banking agencies
shall issue rules to phase-in the Community Bank Leverage Ratio
described in subsection (a) with respect to a rural community bank by
setting lower Community Bank Leverage Ratio percentages during the
first 2 years of the 3-year period described in subsection (a).
SEC. 7. AGRICULTURAL LOAN AUTHORITY FOR FEDERAL SAVINGS ASSOCIATIONS.
Section 5(c) of the Home Owners' Loan Act (12 U.S.C. 1464(c)) is
amended--
(1) in paragraph (1), by adding at the end the following:
``(V) Agricultural loans.--Secured or unsecured
loans for agricultural purposes.''; and
(2) in paragraph (2)(A), by striking ``business, or
agricultural'' and inserting ``or business''.
SEC. 8. STUDY ON DE NOVO FINANCIAL INSTITUTIONS.
(a) Study.--The appropriate Federal banking agencies shall,
jointly, carry out a study on--
(1) the principal causes for the low number of de novo
financial institutions in the 10-year period ending on the date
of enactment of this Act; and
(2) ways to promote more de novo financial institutions in
areas currently underserved by financial institutions.
(b) Report to Congress.--Not later than 1 year after the date of
enactment of this Act, the appropriate Federal banking agencies shall,
jointly, issue a report to Congress containing all findings and
determinations made in carrying out the study required under subsection
(a).
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