H.R.478 - Promoting New Bank Formation Act (119th Congress)
Summary
H.R.478, the Promoting New Bank Formation Act, aims to ease regulatory burdens on newly formed (de novo) financial institutions and rural community banks. It introduces a 3-year phase-in period for compliance with federal capital standards and provides flexibility in business plan adjustments. The bill also addresses agricultural lending authority for federal savings associations and mandates a study on the low number of de novo banks.
Expected Effects
The Act is likely to encourage the formation of new banks, particularly in rural areas, by reducing initial regulatory hurdles. This could increase competition in the financial sector and improve access to banking services for underserved communities. The changes to agricultural lending authority may also increase the availability of credit for farmers.
Potential Benefits
- Increased access to capital for new banks.
- Reduced regulatory burden for community banks.
- Potential for increased lending to agricultural businesses.
- Greater financial service availability in rural areas.
- A study to identify and address barriers to new bank formation.
Potential Disadvantages
- Reduced capital requirements in the short term could increase risk for new banks.
- Deviation from business plans could lead to instability if not properly managed.
- Potential for unintended consequences from expanded agricultural lending authority.
- The definition of 'rural' may be subject to interpretation and potential abuse.
- Phase-in authority may create inconsistencies in regulatory oversight.
Constitutional Alignment
The bill appears to align with Congress's power to regulate commerce and establish uniform rules regarding bankruptcy, as outlined in Article I, Section 8 of the Constitution. By promoting the formation of new banks and supporting rural community banks, the bill aims to foster economic growth and stability, which falls within the scope of congressional authority. The study on de novo institutions also supports informed legislative action.
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).