[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.
____________________