Committee Advances Tipton's Community Bank Red Tape Relief Bill

Statement

Today, the House Committee on Financial Services advanced Congressman Scott Tipton's (R-CO) Small Bank Exam Cycle Reform Act (H.R. 1553) through a committee markup with unanimous bipartisan support. The bill seeks to reduce red tape compliance burdens on well-managed community banks, which would free up resources so they can better serve the economic needs of their communities.

"As it stands now, community banks are facing an ever-increasing regulatory burden that they can no longer shoulder. This growing burden has had a devastating impact on small banks, forcing consolidation or failure and stifling the creation of new banks in areas that need access to credit," said Tipton. "The Small Bank Exam Cycle Reform Act amends the Federal Deposit Insurance Act to raise the qualifying asset threshold from $500 million to $1 billion. This would allow an additional 676 banks across the U.S. to qualify for a longer exam cycle. To be clear, this relief measure is only for well-managed community banks -- the types of banks that did not cause the financial crisis - but are now struggling to deal with the regulatory blowback."

Currently, only banks with assets below $500 million are eligible for the 18-month cycle, while other small banks are required to undergo an exam every year. H.R. 1553 is supported by the Independent Community Bankers of America, which represents over 6,000 community banks across the nation.

In February, the Office of the Comptroller of the Currency sent draft legislative ideas for regulatory relief to the House Financial Services Committee, including a proposal that is the basis for HR 1553. It was also applauded by the FDIC and OCC during Committee hearings earlier this spring. Not only will this legislation provide relief for community banks, but it will also allow bank examiners to focus their resources working with banks that actually need the additional attention. Congress last raised the threshold for outstanding-rated institutions in 2006 and granted agencies discretion to increase the threshold for good-rated institutions in 2007.

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