Hatch, King, Nelson introduce bipartisan bill to provide community bank relief

U.S. Senators Orrin Hatch (R-UT), Angus King (I-ME), and Bill Nelson (D-FL) introduced the Community Bank Relief Act (S. 1284) to provide regulatory relief to small financial institutions.

The bill preserves financial safety measures and broadens small bank lending opportunities that will provide families, small businesses, and start-ups better credit options.

“Smaller banks are at the heart of our local communities and national economy,” Senator Hatch said.“Sadly, these banks, and the local economies they serve, are being squeezed hard. Post-crisis policies and excess compliance disproportionately hit community lenders relative to large banks, even though community banks were not at the source of the crisis. This bipartisan bill makes a critical improvement to Dodd-Frank without compromising safety standards. This legislation also helps small financial institutions provide households and small businesses more quality-based loans that will invigorate our local communities.”

“It’s common-sense to know that Maine’s community banks are different from large Wall Street banks. But too often today, regulations from Washington treat them as if they’re the same, and community banks — along with the Maine people they serve — are paying the price,” Senator King said. “This bill will help provide relief and flexibility to community banks across Maine that are a critical source of the capital that helps drive our state’s economy.”

“Community banks are connected to local residents in ways large banks cannot be,” Senator Nelson said. “It’s important to ensure that they can continue to meet the needs of local businesses and ordinary Americans without being tripped up by regulations meant for larger banks.”

Statements of Support:

Camden R. Fine, President, and CEO, Independent Community Bankers of America (ICBA):

“On behalf of the more than 5,800 community banks represented by ICBA, I write to express our strong support for S. 1284, which would allow more community bank holding companies to raise needed capital to better serve their customers and communities.”

Chuck Boulier, Chairman, America’s Mutual Banks:

“We believe strongly that small banks are engines of economic growth in those communities where large multi-national banks have forsaken small businesses. Many studies have shown that collectively community banks disproportionately support small business lending where much larger banks seek their business in complex international activities involving large multi-national corporations. Our members believe that it is important to the nation to relieve the unnecessary and inappropriate burdens on community banks which have had a ripple effect on small businesses in much of the country. Therefore, it is with great enthusiasm that we welcome the bi-partisan introduction by you of S. 1284, the Community Bank Relief Act and support its passage by the Senate.”

Howard Headlee, President, the Utah Bankers Association:

“Senator Hatch’s ability to reach across the aisle to promote common sense policies that will benefit Utah is astounding. Increasing the small bank holding company threshold is a simple yet powerful way to support local businesses and Utah’s growing economy without sacrificing the safety of the banking system.”

Along with support from ICBA, America’s Mutual Banks, and the Utah Bankers Association, the Community Bank Relief Act is supported by the Maine Bankers Association and the American Bankers Association.

Senators Hatch, King, and Nelson recently joined a letter urging the Senate Banking Committee to hold a hearing on measures to provide regulatory and supervisory relief for our nation’s small financial institutions, including community banks and credit unions. The letter promotes bipartisan legislative measures to provide relief for these small financial institutions and the customers they serve.


Specifically, S. 1284, the Community Bank Relief Act requires the Federal Reserve to expand the number of institutions to which the Small Bank Holding Company Policy Statement applies by increasing the asset size threshold from $1 billion to $5 billion. For safety purposes, the Federal Reserve may still exclude any bank holding company (BHC) or savings and loan company if the Board determines such action is warranted.

Data from the Federal Deposit Insurance Corporation indicates that raising the asset threshold to $5 billion would affect 443 BHCs and savings and loan holding companies. The bill would also have a dual impact on their subsidiary banks (namely 457 community banks). Based on information provided by the Federal Reserve, 96 percent of BHCs and savings and loan holding companies would be covered by the Small Bank Holding Company Policy Statement should the asset threshold increase from $1 billion to $5 billion (by comparison, 87 percent of BHCs are covered as of December 31, 2016).

Since subsidiary banks are already subject to capital requirements, making the parent small BHC subject to capital requirements is overly onerous and not necessary for financial resilience. The Community Bank Relief Act helps advance the complementary goals of banking soundness, regulatory efficiency, and economic growth.