[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.
____________________