The House of Representatives introduced a bill that, if passed, would aid in the creation of de novo community banks, hopefully providing help to rural communities.
The bill, titled the Promoting Access to Capital in Underbanked Communities Act of 2020 (HR 8410), was introduced Sept. 29, and was referred to the House Committee on Financial Services.
According to the congressional legislative information site, the law would require “the appropriate federal banking agencies to establish a three-year phase-in period for de novo financial institutions to comply with federal capital standards, to provide relief for de novo rural community banks, and other purposes.”
The Independent Community Bankers of America (ICBA) wrote a letter supporting HR 8410.
“Rural America in particular has been adversely impacted by the rapid consolidation of financial institutions over the past decade, which has reduced the number of access points to credit and other financial services for rural farmers, small businesses and consumers,” ICBA President and CEO Rebeca Romero Rainey wrote in a letter.
“The provisions would provide more regulatory, capital, and lending flexibility which will facilitate the creation of de novo banks, encourage investment in these banks, and promote their viability,” Romero Rainey wrote. “Regulation is a burden for all community banks, but it presents a special challenge for de novos that must dedicate their resources to establishing a foothold in their market and achieving viability.”
Besides the three-year phase-in requirement, HR 8410 would also “allow de novo community banks to request permission from the Federal Deposit Insurance Corporation to deviate from its approved business plan,” ICBA said in a release.