H.R.2835 - Small Bank Holding Company Relief Act (119th Congress)
Summary
H.R.2835, the Small Bank Holding Company Relief Act, aims to raise the consolidated assets threshold under the small bank holding company policy statement from its current level to $25 billion. This change would be implemented by revising appendix C to part 225 of title 12, Code of Federal Regulations. The bill intends to provide regulatory relief to smaller bank holding companies.
The bill was introduced in the House of Representatives and referred to the Committee on Financial Services.
The Act is to be enacted by the Senate and House of Representatives.
Expected Effects
The primary effect of this bill, if enacted, would be to reclassify more bank holding companies as "small," subjecting them to less stringent regulatory oversight by the Federal Reserve. This could lead to increased lending capacity for these banks.
It may also reduce compliance costs, potentially freeing up capital for investment and expansion.
However, it could also increase the risk of financial instability if these smaller banks are not adequately monitored.
Potential Benefits
- Reduced regulatory burden for small bank holding companies, potentially leading to increased lending to small businesses and consumers.
- Increased competitiveness of smaller banks against larger institutions.
- Potential for increased investment and economic activity in communities served by these banks.
- Simplification of regulatory compliance, freeing up resources for banks to focus on serving their customers.
- Could lead to more localized decision-making in banking, as smaller banks are often more attuned to the needs of their communities.
Potential Disadvantages
- Increased risk of financial instability due to reduced regulatory oversight.
- Potential for increased risk-taking by smaller banks, which could lead to financial losses for depositors and investors.
- Possible concentration of risk within smaller communities if local banks become overextended.
- May create an uneven playing field between small and large banks, potentially disadvantaging larger institutions that are subject to stricter regulations.
- Could lead to a weakening of consumer protections if smaller banks are not held to the same standards as larger banks.
Constitutional Alignment
The bill appears to align with the constitutional power of Congress to regulate commerce, as outlined in Article I, Section 8, Clause 3 (the Commerce Clause). This clause grants Congress the authority to regulate interstate commerce, which includes the regulation of banks and financial institutions.
There are no apparent conflicts with other constitutional provisions, such as the Bill of Rights. The bill does not appear to infringe on individual liberties or rights.
However, the extent of the regulation and its potential impact on the financial system could be subject to debate regarding the appropriate balance between federal power and state autonomy.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).