119 HR 4437 IH: Supervisory Modifications for Appropriate Risk-based Testing Act of 2025
U.S. House of Representatives
2025-07-16
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I
119th CONGRESS
1st Session
H. R. 4437
IN THE HOUSE OF REPRESENTATIVES
July 16, 2025
Mr. Timmons (for himself and Mr. Foster) introduced the following bill; which was referred to the Committee on Financial Services
A BILL
To reduce the regulatory burden on certain well managed and well capitalized financial institutions, and for other purposes.
1.

Short title
This Act may be cited as the “Supervisory Modifications for Appropriate Risk-based Testing Act of 2025” or the “SMART Act of 2025”.
2.

Examination relief for certain well managed and well capitalized financial institutions
(a)

Insured depository institutions
Section 10(d) of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended by adding at the end the following:
“(11)

Examination relief for certain well managed and well capitalized insured depository institutions
(A)

In general
The following shall apply to a well managed and well capitalized insured depository institution with $6,000,000,000 or less in consolidated assets:
(i)

Alternating limited-scope examinations
After an insured depository institution receives a full-scope, on-site examination from the appropriate Federal banking agency, the next examination of the insured depository institution by the appropriate Federal banking agency shall be a limited-scope examination, as determined by the appropriate Federal banking agency.
(ii)

Combined examinations
If an insured depository institution is otherwise subject to separate safety and soundness examinations, consumer compliance examinations, and information technology and cybersecurity examinations, the appropriate Federal banking agency shall, upon request of the insured depository institution, combine two or three such examinations, as specified by the insured depository institution, and carry them out at the same time.
(B)

Exception
Subparagraph (A) shall not apply to an insured depository institution if—
(i)
the insured depository institution is currently subject to a formal enforcement proceeding or order by the Corporation or the appropriate Federal banking agency; or
(ii)
a person acquired control of the insured depository institution since the most recent full-scope, on-site examination of the insured depository institution from the appropriate Federal banking agency.
(C)

Rulemaking
Not later than 12 months after the date of enactment of this paragraph, the Federal banking agencies shall issue rules to carry out subparagraph (A), including, with respect to an insured depository institution described under subparagraph (A), to—
(i)
establish procedures for the limited-scope examinations described in subparagraph (A)(i);
(ii)
establish procedures for reviewing insured depository institutions that—
(I)
experience material changes in financial condition or operational risk profile between scheduled examinations; or
(II)
have failed to comply with Federal or State banking laws and regulations; and
(iii)
balance the goals of streamlining the examination cycle for individual insured depository institutions and reducing unnecessary regulatory burdens while maintaining sufficient oversight to ensure the continued safety and soundness of the insured depository institutions and compliance with all applicable laws and regulations.
(D)

Rule of construction
Nothing in this paragraph may be construed to limit the authority of a Federal banking agency to conduct off-site monitoring, targeted reviews, or additional full-scope, on-site examinations of an insured depository institution if the Federal banking agency determines such monitoring, reviews, or examinations are necessary to ensure safety and soundness or compliance with applicable laws.
(E)

Definitions
In this paragraph:
(i)

Consumer compliance examination
The term “consumer compliance examination” means an examination to assess compliance with the requirements of Federal consumer financial law (as such term is defined in section 1002 of the Consumer Financial Protection Act of 2010).
(ii)

Well capitalized
The term “well capitalized” has the meaning given that term in section 38(b).
(iii)

Well managed
With respect to an insured depository institution, the term “well managed” means that, when the institution was most recently examined by the appropriate Federal banking agency, the institution was found to be well managed, and the institution’s composite condition was found to be satisfactory or outstanding.”.
(b)

Insured credit unions
Section 204 of the Federal Credit Union Act (12 U.S.C. 1784) is amended by adding at the end the following:
“(h)

Examination relief for certain well managed and well capitalized insured credit unions
(1)

In general
The following shall apply to a well managed and well capitalized insured credit union with $6,000,000,000 or less in consolidated assets:
(A)

Alternating limited-scope examinations
After an insured credit union receives a full-scope, on-site examination from the National Credit Union Administration, the next examination of the insured credit union by the National Credit Union Administration shall be a limited-scope examination, as determined by the National Credit Union Administration.
(B)

Combined examinations
If an insured credit union is otherwise subject to separate safety and soundness examinations, consumer compliance examinations, and information technology and cybersecurity examinations, the National Credit Union Administration shall, upon request of the insured credit union, combine two or three such examinations, as specified by the insured credit union, and carry them out at the same time.
(2)

Exception
Paragraph (1) shall not apply to an insured credit union if the insured credit union is currently subject to a formal enforcement proceeding or order by the National Credit Union Administration.
(3)

Rulemaking
Not later than 12 months after the date of enactment of this subsection, the National Credit Union Administration shall issue rules to carry out paragraph (1), including, with respect to an insured credit union described under paragraph (1), to—
(A)
establish procedures for the limited-scope examinations described in paragraph (1)(A);
(B)
establish procedures for reviewing insured credit unions that—
(i)
experience material changes in financial condition or operational risk profile between scheduled examinations; or
(ii)
have failed to comply with Federal or State banking laws and regulations; and
(C)
balance the goals of streamlining the examination cycle for individual insured credit unions and reducing unnecessary regulatory burdens while maintaining sufficient oversight to ensure the continued safety and soundness of the insured credit unions and compliance with all applicable laws and regulations.
(4)

Rule of construction
Nothing in this subsection may be construed to limit the authority of the National Credit Union Administration to conduct off-site monitoring, targeted reviews, or additional full-scope, on-site examinations of an insured credit union if the National Credit Union Administration determines such monitoring, reviews, or examinations are necessary to ensure safety and soundness or compliance with applicable laws.
(5)

Definitions
In this paragraph:
(A)

Consumer compliance examination
The term “consumer compliance examination” means an examination to assess compliance with the requirements of Federal consumer financial law (as such term is defined in section 1002 of the Consumer Financial Protection Act of 2010).
(B)

Well capitalized
The term “well capitalized” has the meaning given that term in section 216(c).
(C)

Well managed
With respect to an insured credit union, the term “well managed” means that, when the credit union was most recently examined by the National Credit Union Administration, the credit union was found to be well managed, and the credit union’s composite condition was found to be satisfactory or outstanding.”.