[Congressional Record Volume 161, Number 146 (Tuesday, October 6, 2015)]
[House]
[Pages H6802-H6804]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                SMALL BANK EXAM CYCLE REFORM ACT OF 2015

  Mr. NEUGEBAUER. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 1553) to amend the Federal Deposit Insurance Act to specify 
which smaller institutions may qualify for an 18-month examination 
cycle.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 1553

       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 ``Small Bank Exam Cycle Reform 
     Act of 2015''.

     SEC. 2. SMALLER INSTITUTIONS QUALIFYING FOR 18-MONTH 
                   EXAMINATION CYCLE.

       Section 10(d) of the Federal Deposit Insurance Act (12 
     U.S.C. 1820(d)) is amended--
       (1) in paragraph (4)--
       (A) in subparagraph (A), by striking ``$500,000,000'' and 
     inserting ``$1,000,000,000''; and
       (B) in subparagraph (C)(ii), by striking ``$100,000,000'' 
     and inserting ``$200,000,000''; and
       (2) in paragraph (10)--
       (A) by striking ``$100,000,000'' and inserting 
     ``$200,000,000''; and
       (B) by striking ``$500,000,000'' and inserting 
     ``$1,000,000,000''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas (Mr. Neugebauer) and the gentlewoman from New York (Mrs. Carolyn 
B. Maloney) each will control 20 minutes.
  The Chair recognizes the gentleman from Texas.

                              {time}  1615


                             General Leave

  Mr. NEUGEBAUER. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in

[[Page H6803]]

which to revise and extend their remarks and include extraneous 
material on the bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. NEUGEBAUER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I would like to thank Representative Tipton for his hard 
work in advocating for community bank regulatory relief. This is a 
commonsense regulatory relief measure that has earned significant 
bipartisan support. It was reported out of the Financial Services 
Committee by a vote of 58-0.
  This legislation is designed to allow additional well-managed 
financial institutions to qualify for an 18-month exam cycle. The 
longer exam cycle permits community banks to focus their time and 
resources on the surrounding community rather than on the exam process. 
This bill also allows bank examiners to spend their resources working 
with banks that need additional attention instead of with banks that 
are already considered well managed.
  To qualify, an institution must have total assets of less than $1 
billion, and at its most recent examination, it must have earned an 
``outstanding'' or ``good'' rating under the Uniform Financial 
Institutions Rating System, or CAMELS. So only smaller, well-financed, 
well-rated financial institutions who pose very little risk would 
qualify for extended exam cycles.
  I reserve the balance of my time.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I yield myself such 
time as I may consume.
  I rise in support of H.R. 1553, the Small Bank Exam Cycle Reform Act. 
This bill allows more small banks to qualify for a longer, 18-month 
exam cycle. This means that these banks would only have a full, onsite 
examination every 18 months, rather than every 12 months.
  The logic behind this bill is simple: small community banks that are 
both well capitalized and well managed do not need as much regulatory 
scrutiny as larger, more complex banks. In addition, regulators need 
the ability to focus their limited resources on the banks that present 
bigger risks. That is why we have long allowed well-run small banks to 
have less frequent examinations than larger, more complex banks.
  This bill simply increases the threshold for banks that qualify for 
the 18-month cycle from $500 million to $1 billion. Onsite examinations 
are time-consuming endeavors both for the regulator and the bank, and 
if the regulator is conducting exams of these well-run banks more 
frequently than he really needs to, then he is wasting precious 
government resources. In addition, he is also wasting the bank's 
resources, because the frequent exams require the time and attention of 
the bank's executives and staff, and it is costly. Therefore, banks 
with assets between $500 million and $1 billion that are well 
capitalized and well managed will receive real, meaningful regulatory 
relief as a result of this bill.
  Not only is this bill supported by small banks, it is also supported 
by the regulators. The OCC has in fact advocated for this change for 
some time now.
  I am very glad that we are moving this bill through the House today, 
and I hope that the Senate will act quickly on the bill as well so that 
we can get regulatory relief to some very deserving community banks. I 
urge my colleagues to support this bill.
  I congratulate my colleague, Lacy Clay, for also being the lead 
Democrat and working very hard on this bill.
  I reserve the balance of my time.
  Mr. NEUGEBAUER. Mr. Speaker, I yield such time as he may consume to 
the gentleman from Colorado (Mr. Tipton).
  Mr. TIPTON. Mr. Speaker, community banks are a crucial source of 
credit for many across the Nation, but these banks are currently facing 
an ever-increasing regulatory burden that they can no longer shoulder. 
These misguided regulations are resulting in a devastating impact on 
small banks, forcing consolidation or failure and stifling creation of 
new banks in communities that need access to credit.
  In rural areas, such as my district in western Colorado, oftentimes 
the only access to credit for small businesses is a community bank. 
Unfortunately, rising compliance costs and complicated regulatory 
requirements have dried up bank credit for those in need of it most.
  For these reasons, I introduced, along with Representative Lacy Clay 
and Representative Barr, the Small Bank Exam Cycle Reform Act, a 
targeted relief effort designed to allow additional well-managed 
financial institutions to qualify for an 18-month exam cycle.
  Full-scope, onsite examinations of insured depository institutions 
are a rigorous event for banks of all sizes, especially small banks 
that may not have dedicated compliance staff. These examinations 
require significant preparation leading up to the examination, as well 
as attention to the onsite examiner during the exam itself.
  Whereas larger banks can absorb the work hours and compliance costs 
associated with these onsite examinations, community banks, much 
smaller institutions, do not have the economy of scale to deflect the 
burden. However, a longer exam cycle permits well-run community banks 
to focus their time and resources on the surrounding community rather 
than on the exam process, opening up opportunities for sustainable 
economic growth in towns across the United States.
  The Small Bank Exam Cycle Reform Act amends the Federal Deposit 
Insurance Act to increase the qualifying asset threshold from $500 
million to $1 billion for small banks. This relief measure is only for 
well-managed community banks that did not cause the financial crisis 
but are now living with regulatory blowback.
  As part of the examination process, financial regulators rate 
financial institutions on several criteria, including safety and 
soundness and their compliance with legal and regulatory requirements. 
To qualify for the 18-month exam cycle, an institution must have earned 
an outstanding or good rating on their most recent examination. Only 
smaller, well-rated banks, those which pose little risk, can qualify 
for extended exam cycles.
  The banking regulators also support an increase in the qualifying 
asset threshold. 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 
framework for H.R. 1553. The Comptroller of the Currency, Thomas Curry, 
publicly stated such a change would reduce burdens on well-managed 
community institutions. It also was applauded by the FDIC and the OCC 
during committee hearings earlier this spring.
  Not only will this legislation provide relief for community banks, it 
will also allow examiners to focus their resources, working with banks 
that need the additional attention or present supervisory concerns.
  This bipartisan legislation enjoys the support of the American 
Bankers Association, the Independent Community Bankers Association, the 
Conference of State Bank Supervisors, the Small Business and 
Entrepreneurship Council, as well as 19 bipartisan cosponsors. The 
legislation was voted out of the Financial Services Committee with a 
unanimous 58-0 vote.

  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. It is time again to raise the 
threshold in statute so these small banks can continue to serve their 
important purpose in our communities: providing capital for small 
business growth and banking products for their local communities.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I yield 2 minutes 
to the gentleman from Missouri (Mr. Clay), who is also the ranking 
member on the Financial Institutions Subcommittee and the lead Democrat 
on this bill.
  Mr. CLAY. Let me thank my colleague from New York for yielding.
  I, too, rise today to support H.R. 1553, the Small Bank Exam Cycle 
Reform Act. I would also like to commend the gentleman from Colorado 
(Mr. Tipton) as well as Mr. Barr for their leadership on this important 
issue.
  The overwhelming majority of banks in this country are community 
banks with less than $1 billion in assets. As

[[Page H6804]]

the regulatory landscape has evolved for the Nation's financial 
institutions since the financial crisis, I have worked with my 
colleagues on the Financial Services Committee to ensure that our 
community banks are not unduly burdened. H.R. 1553 is a part of that 
effort, as it will extend much-needed relief to Main Street banks by 
allowing well-managed, well-capitalized community banks an opportunity 
to take advantage of an extended 18-month examination cycle.
  While bank examinations are vital to the safety and soundness of the 
American banking system, the time and resources that banks put into 
preparing for and responding to examinations can be extremely time 
consuming, particularly for smaller banks with limited staff and 
resources that cannot afford to divert key personnel away from their 
core business in order to prepare for examinations.
  H.R. 1553 also allows banking regulators to better allocate their 
resources to financial institutions that warrant additional attention 
and away from community banks that have otherwise demonstrated that 
they are soundly managed and well capitalized.
  I have heard from community bankers in Missouri and from across the 
country that straightforward, bipartisan, commonsense regulatory relief 
proposals like H.R. 1553 can contribute significantly to community 
banks' ability to lend to Main Street businesses and reinvest in our 
communities.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mrs. CAROLYN B. MALONEY of New York. I yield the gentleman such time 
as he may consume.
  Mr. CLAY. I look forward to working with Mr. Tipton and my other 
colleagues on the Financial Services Committee to find additional 
opportunities to enact targeted relief for our community banks, and I 
would urge my colleagues to adopt H.R. 1553.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I yield back the 
balance of my time.
  Mr. NEUGEBAUER. Mr. Speaker, this is a commonsense piece of 
legislation. You talk about bipartisan; when it passes out of your 
committee with no opposition, that is bipartisan support. I think that 
says a lot about how important community banks are to America and how 
important this Congress thinks community banks are.
  The fact is these organizations that are well managed and have good 
ratings will only have to get an examination every 18 months. So I 
encourage support for this bill.
  I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Texas (Mr. Neugebauer) that the House suspend the rules 
and pass the bill, H.R. 1553.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. NEUGEBAUER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this motion will be postponed.

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