[House Report 114-474]
[From the U.S. Government Publishing Office]


114th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      114-474

======================================================================

 
TO RAISE THE CONSOLIDATED ASSETS THRESHOLD UNDER THE SMALL BANK HOLDING 
            COMPANY POLICY STATEMENT, AND FOR OTHER PURPOSES

                                _______
                                

 March 23, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 3791]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 3791) to raise the consolidated assets threshold 
under the small bank holding company policy statement, and for 
other purposes, having considered the same, report favorably 
thereon without amendment and recommend that the bill do pass.

                          Purpose and Summary

    Recognizing that small bank holding companies and small 
savings and loan holding companies face unique challenges with 
regard to capital formation, H.R. 3791 would require the 
Federal Reserve Board, within six months of the date of 
enactment, to apply its Small Bank Holding Company Policy 
Statement to bank and savings and loan holding companies with 
pro forma consolidated assets of less than $5 billion. 
Qualifying institutions would be prohibited from engaging in 
any nonbanking activities involving significant leverage and 
may not have a significant amount of outstanding debt that is 
held by the general public. H.R. 3791 also amends Section 171 
of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act to clarify that the exemption it grants to small bank 
holding companies for minimum leverage and risk-based capital 
requirements must also be applied to qualifying savings and 
loan holding companies.

                  Background and Need for Legislation

    To ensure that bank holding companies (BHCs) are able to 
serve as a source of strength for their insured depository 
subsidiaries, the Federal Reserve Board (Board) subjects them 
to consolidated, risk-based and leverage capital adequacy 
guidelines. As part of these guidelines, the Board generally 
discourages the use of debt by BHCs to finance the acquisition 
of banks or other companies; however, the Federal Reserve 
acknowledges that the transfer of ownership of small banks to 
small bank holding companies (SBHCs) often requires the use of 
acquisition debt. Accordingly, in 1980, the Board created an 
exemption for qualifying SBHCs from the BHC capital 
guidelines--the Small Bank Holding Company Policy Statement 
(hereinafter, ``the Policy Statement'').\1\
---------------------------------------------------------------------------
    \1\12 C.F.R., Appendix C to Part 225.
---------------------------------------------------------------------------
    The Policy Statement permits the formation and expansion of 
SBHCs with debt levels that are higher than what would be 
permitted for larger BHCs. The original Policy Statement, 
issued in 1980, set the qualifying asset threshold at $150 
million. In 2006, the Board increased this threshold to $500 
million. On April 9, 2015, the Board issued a final rule to 
implement P.L. 113-250, which requires the Board to raise the 
Small Bank Holding Company Policy Statement threshold to $1 
billion.
    In addition to mandatory consolidated assets of less than 
$1 billion, a BHC seeking to qualify as a SBHC must not:
          (i) be engaged in significant nonbanking activities;
          (ii) conduct significant off-balance sheet activities 
        (including securitization); or
          (iii) have a material amount of debt or equity 
        securities outstanding (other than trust preferred 
        securities) that are registered with the SEC.
    Another benefit enjoyed by those subject to the Policy 
Statement is an exemption from Basel III capital requirements 
and Section 171 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act. Section 171 was designed to ensure 
that BHCs and large nonbank financial institutions ``operate 
under capital standards at least as stringent as those applying 
to [insured] banks.''
    As a consequence of Section 171, BHCs may no longer count 
trust preferred securities as Tier 1 capital. Trust preferred 
securities are a type of ``hybrid capital instrument,'' meaning 
that they have characteristics of both equity and debt. Before 
the Dodd-Frank Act was enacted, these securities were widely 
sold by BHCs that needed to raise capital. As a result of the 
Dodd-Frank Act, many BHCs have been required to replace their 
existing trust preferred securities with other forms of 
capital, such as common equity.
    Under the Policy Statement, BHCs that qualify as SBHCs may 
use debt to finance up to 75 percent of the purchase price of 
an acquisition, but are subject to ongoing requirements and 
restrictions. First, organizations are not allowed to pay 
dividends if their debt-to-equity ratio exceeds 1:1. Second, 
the Federal Reserve expects that holding companies will retire 
all debt within 25 years and reduce debt to 30 percent or less 
of equity within 12 years of incurring the debt, to ensure that 
the higher leverage does not pose an undue burden on subsidiary 
depository institutions. Finally, the Federal Reserve requires 
that each depository institution subsidiary remain well-
capitalized.
    In a letter to the Committee dated December 7, 2015, the 
American Bankers Association stated its support for H.R. 3791, 
writing that:

          This legislation facilitates the ability of community 
        banks to issue debt and raise capital and thus increase 
        their involvement in promoting the growth of their 
        local economies. This is extremely important as 
        regulators have proposed through other regulations to 
        increase capital requirements significantly for both 
        community banks and larger institutions in the coming 
        years.

    In a letter to the Committee dated December 7, 2015, the 
Independent Community Bankers of America stated its support for 
H.R. 3791, writing that:

          [H.R. 3791] would provide additional capital for 
        community banks to serve their customers and 
        communities . . . [and would] allow community banks to 
        better serve their local businesses and create new 
        jobs.

                                Hearings

    The Subcommittee on Financial Institutions and Consumer 
Credit did not hold hearings on H.R. 3791 in the 114th 
Congress. In the 113th Congress, on April 16, 2013, the 
Subcommittee held a hearing examining issues related to H.R. 
3791's subject matter.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
December 8, 2015 and December 9, 2015, and ordered H.R. 3791 to 
be reported favorably to the House without amendment by a 
recorded vote of 33 yeas to 21 nays (recorded vote no. FC-77), 
a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole record vote in Committee was a motion by Chairman 
Hensarling to report the bill favorably to the House without 
amendment. That motion was agreed to by a recorded vote of 33 
yeas to 21 nays (record vote no. FC-77), a quorum being 
present.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 3791 
will promote the formation and expansion of small bank holding 
companies by raising the consolidated assets threshold under 
the Small Bank Holding Company Policy Statement from $1 billion 
to $5 billion.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, February 12, 2016.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3791, a bill to 
raise the consolidated assets threshold under the small bank 
holding company policy statement, and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sarah Puro.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 3791--A bill to raise the consolidated assets threshold under the 
        small bank holding company policy statement, and for other 
        purposes

    H.R. 3791 would require the Federal Reserve to expand its 
policy statement on the allowable debt levels of certain small 
bank holding companies (usually when their ownership is being 
transferred). Currently the policy statement applies to bank 
holding companies with less than $1 billion in total 
consolidated assets. Under the bill, it would apply to bank 
holding companies with less than $5 billion in such assets.
    Generally, banks with higher debt levels are riskier and 
their defaults are more likely to incur direct spending costs 
through the Deposit Insurance Fund (DIF), which is administered 
by the Federal Deposit Insurance Corporation (FDIC). However, 
the Federal Reserve may choose not to apply the policy 
statement on allowable debt levels to any bank holding company, 
regardless of asset size, if appropriate supervision of the 
holding company requires such an action. CBO expects that the 
Federal Reserve would not allow bank holding companies to take 
on additional debt under this policy if that debt would 
jeopardize the solvency of the bank holding company and 
significantly increase the likelihood of failure. Further, 
because the Federal Reserve already supervises those small bank 
holding companies, CBO expects that any changes to its 
administrative costs would be insignificant. Administrative 
costs to the Federal Reserve are recorded in the budget as a 
change in revenues.
    Because enacting H.R. 3791 could affect direct spending and 
revenues, pay-as-you-go procedures apply. However, CBO 
estimates that the net effects would be insignificant for each 
year. CBO estimates that enacting H.R. 3791 would not increase 
net direct spending or on-budget deficits by $5 billion in any 
of the four consecutive 10-year periods beginning in 2027.
    H.R. 3791 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contacts for this estimate are Sarah Puro 
(for the FDIC) and Nathaniel Frentz (for the Federal Reserve). 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 3791 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    Duplication of Federal Programs

    Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015), 
the Committee states that no provision of H.R. 3791 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, 114th Cong. (2015), 
the Committee states that H.R. 3791 contains one directed 
rulemaking.

             Section-by-Section Analysis of the Legislation


Section 1. Changes required to small bank holding company policy 
        statement on assessment of financial aid and managerial factors

    This section requires the Board of Governors of the Federal 
Reserve System to revise the Small Bank Holding Company Policy 
Statement to provide that bank holding companies and savings 
and loan holding companies shall be subject to such Policy 
Statement if they have pro forma consolidated assets of less 
than $5 billion. This section also exempts such financial 
institutions from the Dodd-Frank Act's leverage and risk-based 
capital requirements if the institution is subject to the 
Policy Statement.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

       DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT




           *       *       *       *       *       *       *
TITLE I--FINANCIAL STABILITY

           *       *       *       *       *       *       *


Subtitle C--Additional Board of Governors Authority for Certain Nonbank 
Financial Companies and Bank Holding Companies

           *       *       *       *       *       *       *


SEC. 171. LEVERAGE AND RISK-BASED CAPITAL REQUIREMENTS.

  (a) Definitions.--For purposes of this section, the following 
definitions shall apply:
          (1) Generally applicable leverage capital 
        requirements.--The term ``generally applicable leverage 
        capital requirements'' means--
                  (A) the minimum ratios of tier 1 capital to 
                average total assets, as established by the 
                appropriate Federal banking agencies to apply 
                to insured depository institutions under the 
                prompt corrective action regulations 
                implementing section 38 of the Federal Deposit 
                Insurance Act, regardless of total consolidated 
                asset size or foreign financial exposure; and
                  (B) includes the regulatory capital 
                components in the numerator of that capital 
                requirement, average total assets in the 
                denominator of that capital requirement, and 
                the required ratio of the numerator to the 
                denominator.
          (2) Generally applicable risk-based capital 
        requirements.--The term ``generally applicable risk-
        based capital requirements'' means--
                  (A) the risk-based capital requirements, as 
                established by the appropriate Federal banking 
                agencies to apply to insured depository 
                institutions under the prompt corrective action 
                regulations implementing section 38 of the 
                Federal Deposit Insurance Act, regardless of 
                total consolidated asset size or foreign 
                financial exposure; and
                  (B) includes the regulatory capital 
                components in the numerator of those capital 
                requirements, the risk-weighted assets in the 
                denominator of those capital requirements, and 
                the required ratio of the numerator to the 
                denominator.
          (3) Definition of depository institution holding 
        company.--The term ``depository institution holding 
        company'' means a bank holding company or a savings and 
        loan holding company (as those terms are defined in 
        section 3 of the Federal Deposit Insurance Act) that is 
        organized in the United States, including any bank or 
        savings and loan holding company that is owned or 
        controlled by a foreign organization, but does not 
        include the foreign organization.
          (4) Business of insurance.--The term ``business of 
        insurance'' has the same meaning as in section 1002(3).
          (5) Person regulated by a state insurance 
        regulator.--The term ``person regulated by a State 
        insurance regulator'' has the same meaning as in 
        section 1002(22).
          (6) Regulated foreign subsidiary and regulated 
        foreign affiliate.--The terms ``regulated foreign 
        subsidiary'' and ``regulated foreign affiliate'' mean a 
        person engaged in the business of insurance in a 
        foreign country that is regulated by a foreign 
        insurance regulatory authority that is a member of the 
        International Association of Insurance Supervisors or 
        other comparable foreign insurance regulatory authority 
        as determined by the Board of Governors following 
        consultation with the State insurance regulators, 
        including the lead State insurance commissioner (or 
        similar State official) of the insurance holding 
        company system as determined by the procedures within 
        the Financial Analysis Handbook adopted by the National 
        Association of Insurance Commissioners, where the 
        person, or its principal United States insurance 
        affiliate, has its principal place of business or is 
        domiciled, but only to the extent that--
                  (A) such person acts in its capacity as a 
                regulated insurance entity; and
                  (B) the Board of Governors does not determine 
                that the capital requirements in a specific 
                foreign jurisdiction are inadequate.
          (7) Capacity as a regulated insurance entity.--The 
        term ``capacity as a regulated insurance entity''--
                  (A) includes any action or activity 
                undertaken by a person regulated by a State 
                insurance regulator or a regulated foreign 
                subsidiary or regulated foreign affiliate of 
                such person, as those actions relate to the 
                provision of insurance, or other activities 
                necessary to engage in the business of 
                insurance; and
                  (B) does not include any action or activity, 
                including any financial activity, that is not 
                regulated by a State insurance regulator or a 
                foreign agency or authority and subject to 
                State insurance capital requirements or, in the 
                case of a regulated foreign subsidiary or 
                regulated foreign affiliate, capital 
                requirements imposed by a foreign insurance 
                regulatory authority.
  (b) Minimum Capital Requirements.--
          (1) Minimum leverage capital requirements.--The 
        appropriate Federal banking agencies shall establish 
        minimum leverage capital requirements on a consolidated 
        basis for insured depository institutions, depository 
        institution holding companies, and nonbank financial 
        companies supervised by the Board of Governors. The 
        minimum leverage capital requirements established under 
        this paragraph shall not be less than the generally 
        applicable leverage capital requirements, which shall 
        serve as a floor for any capital requirements that the 
        agency may require, nor quantitatively lower than the 
        generally applicable leverage capital requirements that 
        were in effect for insured depository institutions as 
        of the date of enactment of this Act.
          (2) Minimum risk-based capital requirements.--The 
        appropriate Federal banking agencies shall establish 
        minimum risk-based capital requirements on a 
        consolidated basis for insured depository institutions, 
        depository institution holding companies, and nonbank 
        financial companies supervised by the Board of 
        Governors. The minimum risk-based capital requirements 
        established under this paragraph shall not be less than 
        the generally applicable risk-based capital 
        requirements, which shall serve as a floor for any 
        capital requirements that the agency may require, nor 
        quantitatively lower than the generally applicable 
        risk-based capital requirements that were in effect for 
        insured depository institutions as of the date of 
        enactment of this Act.
          (3) Investments in financial subsidiaries.--For 
        purposes of this section, investments in financial 
        subsidiaries that insured depository institutions are 
        required to deduct from regulatory capital under 
        section 5136A of the Revised Statutes of the United 
        States or section 46(a)(2) of the Federal Deposit 
        Insurance Act need not be deducted from regulatory 
        capital by depository institution holding companies or 
        nonbank financial companies supervised by the Board of 
        Governors, unless such capital deduction is required by 
        the Board of Governors or the primary financial 
        regulatory agency in the case of nonbank financial 
        companies supervised by the Board of Governors.
          (4) Effective dates and phase-in periods.--
                  (A) Debt or equity instruments on or after 
                may 19, 2010.--For debt or equity instruments 
                issued on or after May 19, 2010, by depository 
                institution holding companies or by nonbank 
                financial companies supervised by the Board of 
                Governors, this section shall be deemed to have 
                become effective as of May 19, 2010.
                  (B) Debt or equity instruments issued before 
                may 19, 2010.--For debt or equity instruments 
                issued before May 19, 2010, by depository 
                institution holding companies or by nonbank 
                financial companies supervised by the Board of 
                Governors, any regulatory capital deductions 
                required under this section shall be phased in 
                incrementally over a period of 3 years, with 
                the phase-in period to begin on January 1, 
                2013, except as set forth in subparagraph (C).
                  (C) Debt or equity instruments of smaller 
                institutions.--For debt or equity instruments 
                issued before May 19, 2010, by depository 
                institution holding companies with total 
                consolidated assets of less than 
                $15,000,000,000 as of December 31, 2009, and by 
                organizations that were mutual holding 
                companies on May 19, 2010, the capital 
                deductions that would be required for other 
                institutions under this section are not 
                required as a result of this section.
                  (D) Depository institution holding companies 
                not previously supervised by the board of 
                governors.--For any depository institution 
                holding company that was not supervised by the 
                Board of Governors as of May 19, 2010, the 
                requirements of this section, except as set 
                forth in subparagraphs (A) and (B), shall be 
                effective 5 years after the date of enactment 
                of this Act
                  (E) Certain bank holding company subsidiaries 
                of foreign banking organizations.--For bank 
                holding company subsidiaries of foreign banking 
                organizations that have relied on Supervision 
                and Regulation Letter SR-01-1 issued by the 
                Board of Governors (as in effect on May 19, 
                2010), the requirements of this section, except 
                as set forth in subparagraph (A), shall be 
                effective 5 years after the date of enactment 
                of this Act.
          (5) Exceptions.--This section shall not apply to--
                  (A) debt or equity instruments issued to the 
                United States or any agency or instrumentality 
                thereof pursuant to the Emergency Economic 
                Stabilization Act of 2008, and prior to October 
                4, 2010;
                  (B) any Federal home loan bank; or
                  [(C) any bank holding company or savings and 
                loan holding company having less than 
                $1,000,000,000 in total consolidated assets 
                that complies with the requirements of the 
                Small Bank Holding Company Policy Statement on 
                Assessment of Financial and Managerial Factors 
                of the Board of Governors (12 CFR part 225 
                appendix C), as the requirements of such Policy 
                Statement are amended pursuant to section 1 of 
                an Act entitled ``To enhance the ability of 
                community financial institutions to foster 
                economic growth and serve their communities, 
                boost small businesses, increase individual 
                savings, and for other purposes''.]
                  (C) any bank holding company or savings and 
                loan holding company that is subject to the 
                application of the Small Bank Holding Company 
                Policy Statement on Assessment of Financial and 
                Managerial Factors of the Board of Governors 
                (12 C.F.R. part 225--appendix C).
          (6) Study and report on small institution access to 
        capital.--
                  (A) Study required.--The Comptroller General 
                of the United States, after consultation with 
                the Federal banking agencies, shall conduct a 
                study of access to capital by smaller insured 
                depository institutions.
                  (B) Scope.--For purposes of this study 
                required by subparagraph (A), the term 
                ``smaller insured depository institution'' 
                means an insured depository institution with 
                total consolidated assets of $5,000,000,000 or 
                less.
                  (C) Report to congress.--Not later than 18 
                months after the date of enactment of this Act, 
                the Comptroller General of the United States 
                shall submit to the Committee on Banking, 
                Housing, and Urban Affairs of the Senate and 
                the Committee on Financial Services of the 
                House of Representatives a report summarizing 
                the results of the study conducted under 
                subparagraph (A), together with any 
                recommendations for legislative or regulatory 
                action that would enhance the access to capital 
                of smaller insured depository institutions, in 
                a manner that is consistent with safe and sound 
                banking operations.
          (7) Capital requirements to address activities that 
        pose risks to the financial system.--
                  (A) In general.--Subject to the 
                recommendations of the Council, in accordance 
                with section 120, the Federal banking agencies 
                shall develop capital requirements applicable 
                to insured depository institutions, depository 
                institution holding companies, and nonbank 
                financial companies supervised by the Board of 
                Governors that address the risks that the 
                activities of such institutions pose, not only 
                to the institution engaging in the activity, 
                but to other public and private stakeholders in 
                the event of adverse performance, disruption, 
                or failure of the institution or the activity.
                  (B) Content.--Such rules shall address, at a 
                minimum, the risks arising from--
                          (i) significant volumes of activity 
                        in derivatives, securitized products 
                        purchased and sold, financial 
                        guarantees purchased and sold, 
                        securities borrowing and lending, and 
                        repurchase agreements and reverse 
                        repurchase agreements;
                          (ii) concentrations in assets for 
                        which the values presented in financial 
                        reports are based on models rather than 
                        historical cost or prices deriving from 
                        deep and liquid 2-way markets; and
                          (iii) concentrations in market share 
                        for any activity that would 
                        substantially disrupt financial markets 
                        if the institution is forced to 
                        unexpectedly cease the activity.
  (c) Clarification.--
          (1) In general.--In establishing the minimum leverage 
        capital requirements and minimum risk-based capital 
        requirements on a consolidated basis for a depository 
        institution holding company or a nonbank financial 
        company supervised by the Board of Governors as 
        required under paragraphs (1) and (2) of subsection 
        (b), the appropriate Federal banking agencies shall not 
        be required to include, for any purpose of this section 
        (including in any determination of consolidation), a 
        person regulated by a State insurance regulator or a 
        regulated foreign subsidiary or a regulated foreign 
        affiliate of such person engaged in the business of 
        insurance, to the extent that such person acts in its 
        capacity as a regulated insurance entity.
          (2) Rule of construction on board's authority.--This 
        subsection shall not be construed to prohibit, modify, 
        limit, or otherwise supersede any other provision of 
        Federal law that provides the Board of Governors 
        authority to issue regulations and orders relating to 
        capital requirements for depository institution holding 
        companies or nonbank financial companies supervised by 
        the Board of Governors.
          (3) Rule of construction on accounting principles.--
                  (A) In general.--A depository institution 
                holding company or nonbank financial company 
                supervised by the Board of Governors of the 
                Federal Reserve that is also a person regulated 
                by a State insurance regulator that is engaged 
                in the business of insurance that files 
                financial statements with a State insurance 
                regulator or the National Association of 
                Insurance Commissioners utilizing only 
                Statutory Accounting Principles in accordance 
                with State law, shall not be required by the 
                Board under the authority of this section or 
                the authority of the Home Owners' Loan Act to 
                prepare such financial statements in accordance 
                with Generally Accepted Accounting Principles.
                  (B) Preservation of authority.--Nothing in 
                subparagraph (A) shall limit the authority of 
                the Board under any other applicable provision 
                of law to conduct any regulatory or supervisory 
                activity of a depository institution holding 
                company or non-bank financial company 
                supervised by the Board of Governors, including 
                the collection or reporting of any information 
                on an entity or group-wide basis. Nothing in 
                this paragraph shall excuse the Board from its 
                obligations to comply with section 161(a) of 
                the Dodd-Frank Wall Street Reform and Consumer 
                Protection Act (12 U.S.C. 5361(a)) and section 
                10(b)(2) of the Home Owners' Loan Act (12 
                U.S.C. 1467a(b)(2)), as appropriate.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    In the 113th Congress Democrats and Republicans worked 
together on a bipartisan bill that provided relief to 
approximately 4,900 community banks by doubling the asset 
threshold for the Fed's Small Bank Holding Company Statement 
from $500 million in assets to $1 billion in assets.
    In the 114th Congress, less than one year since President 
Obama signed that change into law, Republicans are undermining 
bipartisan compromise by increasing by five-fold the regulatory 
cap that both parties so recently agreed to double. This would 
mean a Small Bank Holding Company Policy Statement threshold 
that is ten times what it was just a year ago.
    The Minority worked with regulators and others in Congress 
last year to evaluate what number to best set a new threshold, 
and there are a number of reasons that we came to agreement on 
$1 billion in consolidated assets.
    The primary purpose of the Small Bank Holding Company 
Policy Statement is to make it easier for small, community 
banks to purchase other small institutions. Many Members have 
claimed that community banks are disappearing every day, and 
included among that statistic are banks which have merged or 
been bought by other institutions. The Minority wants to ensure 
that communities retain access to local banks. Setting the 
threshold at $1 billion makes it more likely that if a bank is 
acquired, it will be by an institution that has similar roots 
in the community, that will know the community's needs, and 
that will best serve the community's consumers and small 
businesses.
    However, we are very concerned that a bank with a $5 
billion footprint would not provide the same kind of personal 
service a smaller institution might, and are further concerned 
that raising the threshold could encourage aggressive growth at 
a firm that is more concerned with its bottom line than the 
concerns of the communities it serves.
    Another important matter of size is that institutions over 
$1 billion in assets have better access to raising funds in the 
capital markets--and many of us on both sides of the aisle have 
recently worked to pass legislation making sure these banks and 
thrifts have easier access to the capital markets.
    Secondly, many community banks failed during the crisis 
because they became overleveraged. While it is appropriate to 
allow banks to fail that make bad decisions, we must remember 
that when a community bank fails it has an enormous impact on 
the consumers and small businesses it served, and also drains 
the Deposit Insurance Fund. Congress has a duty to ensure that 
banks are prudently run and that the Deposit Insurance Fund is 
not put at unnecessary risk. Allowing institutions with as much 
as $5 billion in assets to operate under a lowered set of 
capital standards and with fewer reports to regulators put 
communities and the Deposit Insurance Fund at higher risk.
    Setting the threshold at $1 billion was the prudent balance 
between acceptable risk and allowing most community banks to 
benefit from the economies of scale a merger or acquisition 
provides. Multiplying that threshold five times over, less than 
one year after the threshold has already been doubled, is 
reckless.
    In order to ensure we have a stable banking system 
especially in our rural and underserved communities, we must 
more carefully consider the impact of so quickly eliminating 
capital standards for a large swath of bank holding companies. 
In order to ensure our communities remain well served by access 
to affordable banking services, we must more carefully consider 
the impact of incentivizing further concentration.
    For these reasons, the Minority opposes H.R. 3791.

                                   Maxine Waters.
                                   Joyce Beatty.
                                   Juan Vargas.
                                   Keith Ellison.

                                  [all]