[Congressional Record Volume 164, Number 19 (Monday, January 29, 2018)]
[House]
[Pages H645-H647]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      FEDERAL SAVINGS ASSOCIATION CHARTER FLEXIBILITY ACT OF 2017

  Mr. TIPTON. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 1426) to amend the Home Owners' Loan Act to allow Federal 
savings associations to elect to operate as national banks, and for 
other purposes.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 1426

       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 ``Federal Savings Association 
     Charter Flexibility Act of 2017''.

     SEC. 2. OPTION FOR FEDERAL SAVINGS ASSOCIATIONS TO OPERATE AS 
                   A COVERED SAVINGS ASSOCIATION.

       The Home Owners' Loan Act is amended by inserting after 
     section 5 (12 U.S.C. 1464) the following:

     ``SEC. 5A. ELECTION TO OPERATE AS A COVERED SAVINGS 
                   ASSOCIATION.

       ``(a) Definition.--In this section, the term `covered 
     savings association' means a Federal savings association that 
     makes an election approved under subsection (b).
       ``(b) Election.--
       ``(1) In general.--Upon issuance of the rules described in 
     subsection (f), a Federal savings association may elect to 
     operate as a covered savings association by submitting a 
     notice to the Comptroller of such election.
       ``(2) Approval.--A Federal savings association shall be 
     deemed to be approved to operate as a covered savings 
     association on the date that is 60 days after the date on 
     which the Comptroller receives the notice under paragraph 
     (1), unless the Comptroller notifies the Federal savings 
     association otherwise.
       ``(c) Rights and Duties.--Notwithstanding any other 
     provision of law and except as otherwise provided in this 
     section, a covered savings association shall--
       ``(1) have the same rights and privileges as a national 
     bank that has its main office situated in the same location 
     as the home office of the covered savings association; and
       ``(2) be subject to the same duties, restrictions, 
     penalties, liabilities, conditions, and limitations that 
     would apply to such a national bank.
       ``(d) Treatment of Covered Savings Associations.--A covered 
     savings association shall be treated as a Federal savings 
     association for the purposes--
       ``(1) of governance of the covered savings association, 
     including incorporation, bylaws, boards of directors, 
     shareholders, and distribution of dividends;
       ``(2) of consolidation, merger, dissolution, conversion 
     (including conversion to a stock bank or to another charter), 
     conservatorship, and receivership; and
       ``(3) determined by regulation of the Comptroller.
       ``(e) Existing Branches.--A covered savings association may 
     continue to operate any branch or agency the covered savings 
     association operated on the date on which an election under 
     subsection (b) is approved.
       ``(f) Rulemaking.--The Comptroller shall issue rules to 
     carry out this section--
       ``(1) that establish streamlined standards and procedures 
     that clearly identify required documentation or timelines for 
     an election under subsection (b);
       ``(2) that require a Federal savings association that makes 
     an election under subsection (b) to identify specific assets 
     and subsidiaries--
       ``(A) that do not conform to the requirements for assets 
     and subsidiaries of a national bank; and
       ``(B) that are held by the Federal savings association on 
     the date on which the Federal savings association submits a 
     notice of such election;
       ``(3) that establish--
       ``(A) a transition process for bringing such assets and 
     subsidiaries into conformance with the requirements for a 
     national bank; and

[[Page H646]]

       ``(B) procedures for allowing the Federal savings 
     association to provide a justification for grandfathering 
     such assets and subsidiaries after electing to operate as a 
     covered savings association;
       ``(4) that establish standards and procedures to allow a 
     covered savings association to terminate an election under 
     subsection (b) after an appropriate period of time or to make 
     a subsequent election;
       ``(5) that clarify requirements for the treatment of 
     covered savings associations, including the provisions of law 
     that apply to covered savings associations; and
       ``(6) as the Comptroller deems necessary and in the 
     interests of safety and soundness.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Colorado (Mr. Tipton) and the gentlewoman from New York (Ms. Velazquez) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Colorado.


                             General Leave

  Mr. TIPTON. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days in which to revise and extend their remarks and 
include extraneous material on this bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Colorado?
  There was no objection.
  Mr. TIPTON. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, mutual savings banks, cooperative banks, and mutual 
savings and loan associations are essential community-based financial 
institutions that have a long history of serving their neighbors and 
promoting small-town economic growth.
  However, many of the benefits once given to Federal savings 
associations, also known as thrifts, that encouraged community growth 
and financial well-being have been stifled by changes initiated under 
the Dodd-Frank Act. While Dodd-Frank eliminated many of the benefits 
provided to Federal savings associations, the HOLA restrictions, 
unfortunately, remain.
  These restrictions have left Federal savings associations at a 
disadvantage and without the flexibility needed to adapt to meet 
community needs and, as a result, are forcing many mutual banks to 
either close or merge with other institutions, meaning fewer and more 
expensive choices for consumers hoping to finance important purchases.
  H.R. 1426, Mr. Rothfus' bipartisan legislation that passed out of the 
Financial Services Committee unanimously, would help to preserve these 
important community financial institutions by providing mutual banks 
with a framework to become covered savings associations. This process 
would provide thrifts the ability to operate with the same rights and 
duties as national banks without subjecting them to a complex, time-
consuming, and costly charter conversion process.
  Providing thrifts the flexibility to exercise national bank powers 
without changing their charters would give institutions the ability to 
exceed the commercial and consumer loan limits that apply under the 
Home Owners' Loan Act but continue to benefit from their structure for 
purposes of consolidation, merger, dissolution, conservatorship, and 
receivership.
  Because the Office of the Comptroller of the Currency already 
supervises both national bank and Federal savings association charters, 
it is uniquely positioned to provide the structural framework for the 
election process that would transition the rights and duties of a 
national bank to a thrift.
  Mr. Rothfus' bill instructs the OCC to develop a series of 
rulemakings to outline this election process, while also requiring 
safeguards to prevent malpractice in the transition process, as well as 
abuses in the new structure once it has been instituted.

                              {time}  1800

  Community financial institutions should be given the tools they need 
to lend effectively to their communities, and this bill creates the 
legislative landscape for savings associations to do just that.
  Ultimately, the bill creates opportunities for families and small 
businesses to access financing for their important purchases, from 
buying a home to expanding a business.
  Federal savings associations have a long, proud history of being 
responsive to their communities' needs, and this legislation will help 
them to enhance and continue that record.
  I cannot give more emphatic support for this commonsense, bipartisan 
legislation, and I urge my colleagues to support this measure.
  Mr. Speaker, I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, currently, the Home Owners' Loan Act imposes limitations 
on the portfolio mix of loans and investments that a thrift institution 
can make. Such limitations include the amount of commercial and 
consumer loans that a thrift can hold and a requirement that they hold 
a certain percentage of qualified thrift investments. These 
restrictions are not currently faced by national banks and other 
financial institutions.
  If a thrift decides that it wants to engage in more commercial 
lending or otherwise seeks to expand its product offerings beyond what 
is allowed under current law, they have to undergo a time-consuming 
process of converting the stock form of their organization in order to 
apply for a national bank charter. For smaller thrifts in particular, 
the charter conversion process can be costly.
  H.R. 1426 solves this problem by amending the Home Owners' Loan Act 
and creating an election process for thrifts to operate as a national 
bank without having to convert their charter to a national bank.
  This proposal originated from former Comptroller Curry in 2014 to 
give thrifts flexibility with respect to the current limitations on the 
amount of commercial and consumer loans that a thrift can hold.
  While the terms and conditions of a charter are important, we should 
be careful about blurring lines. Therefore, I am pleased that the OCC 
can reject providing the flexibility to a particular thrift under this 
bill and can take other supervisory actions to promote safety and 
soundness.
  According to the FDIC, there were 768 thrifts as of last September, 
compared to nearly 5,000 State and national banks, and all but 15 of 
these thrifts have less than $10 billion in assets, which underscores 
that this bill will mostly help small institutions better serve their 
communities.
  Former Comptroller Curry described the proposal as a tool for 
enabling ``Federal thrifts to diversify their loan portfolios, maintain 
their Federal charter, and retain the OCC as their regulator.''
  I thank Mr. Rothfus and Mr. Himes for introducing this bipartisan 
bill, and I urge my colleagues to support it.
  Mr. Speaker, I reserve the balance of my time.
  Mr. TIPTON. Mr. Speaker, I yield 5 minutes to the gentleman from 
Pennsylvania (Mr. Rothfus), vice chairman of the Financial Services 
Subcommittee on Financial Institutions and Consumer Credit. He is also 
the sponsor of this legislation.
  Mr. ROTHFUS. Mr. Speaker, I thank my good friend for yielding.
  I thank my colleagues on both sides of the aisle for their support of 
this important bipartisan legislation, and especially the lead 
Democratic cosponsor, Representative Jim Himes from Connecticut.
  The Federal Savings Association Charter Flexibility Act is a 
commonsense reform bill that will help to ensure that community banks, 
many of which have histories stretching back generations, can continue 
to serve the needs of Main Street businesses and families.
  Specifically, this bill focuses on Federal savings associations, also 
known as thrifts. These institutions are similar to national banks in 
the sense that they are both chartered and regulated by the Office of 
the Comptroller of the Currency and the FDIC.
  But these banks are constrained in their ability to pursue certain 
lines of business under the Home Owners' Loan Act, also known as HOLA. 
Specifically, HOLA subjects Federal thrifts to commercial lending 
limits.
  Under what is known as the qualified thrift lender test, at least 65 
percent of a Federal thrift's portfolio assets must comprise certain 
mortgage and consumer-related assets. These institutions are also 
constrained in their ability to hold commercial loans, paper, or 
corporate debt. In contrast, national banks enjoy the ability to engage 
in a much wider range of lending activities.

[[Page H647]]

  These restrictions originally made sense because thrifts also enjoyed 
advantages not afforded to national banks. But changes in law have 
eliminated or curtailed many of those benefits, and some thrifts have 
expressed frustration that these restrictions prevent them from being 
able to meet the changing needs of their local communities. 
Unfortunately, thrifts have not been immune to the industrywide trend 
of consolidations and closures that has accelerated over the last 
decade.
  The Federal Savings Association Charter Flexibility Act provides 
these banks with additional flexibility to adjust to changing times and 
continue to serve their communities, despite these persistent 
headwinds.
  Under current law, the only option available to Federal savings 
associations is a costly and complicated conversion to a national bank 
charter. This is a particularly burdensome process for mutually 
chartered Federal thrifts since it requires that they first convert to 
stock form before converting their charter.
  The Federal Savings Association Charter Flexibility Act provides 
another, less disruptive option. Under my bill, Federal thrifts will 
have the ability to pursue a path that will allow them to operate with 
the same rights and duties as a national bank. But these banks will 
not have to go through the costly and cumbersome process of converting 
to stock form and then rechartering. Instead, the bill sets up a simple 
60-day election process that will allow these institutions to become 
covered savings associations.

  It will also require the OCC, which has been supportive of this 
legislation and has responsibility for regulating Federal savings 
associations and national banks, to establish an orderly and 
streamlined transition process.
  This bill also includes important safeguards to prevent potential 
fire sales of assets and subsidiaries during the transition process, 
and it protects the OCC's ability to prevent firms from abusing the new 
structure.
  Altogether, this effort will help to ensure that time-tested 
community financial institutions will continue to be able to serve 
their customers for years to come.
  The Federal Savings Association Charter Flexibility Act has the 
support of the American Bankers Association and the Independent 
Community Bankers of America. It is also bipartisan, and it passed the 
Financial Services Committee with a 55-0 vote. Similar language has 
been included in the bipartisan Senate Banking Committee package, also.
  In short, this bill represents the sort of reasonable, commonsense, 
across-the-aisle reform that our constituents want to see.
  I want to briefly share some comments from the Pennsylvania Bankers 
Association, which represents a wide range of banks in the Commonwealth 
of Pennsylvania. In their letter of support for this bill, they wrote: 
``. . . this legislation represents sound, sensible regulatory 
relief.''
  They also added that ``Federal savings associations are known for 
being responsive to their communities' needs, and this legislation will 
help them to expand and continue to do so.''
  I ask that my colleagues support H.R. 1426, the Federal Savings 
Association Charter Flexibility Act.
  Ms. VELAZQUEZ. Mr. Speaker, I yield back the balance of my time.
  Mr. TIPTON. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Colorado (Mr. Tipton) that the House suspend the rules 
and pass the bill, H.R. 1426.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

                          ____________________