Promoting New and Diverse Depository Institutions Act

Madam Speaker, I yield myself such time as I may consume.

Since the Dodd-Frank Act was enacted, the number of community financial institutions has steadily declined. Republicans know this trend is due to increased regulatory and compliance burdens banks and credit unions face that inhibit their ability to survive, let alone, thrive. Republicans have consistently pushed for regulatory rightsizing including tailoring regulation, not imposing one-size-fits-all requirements.

H.R. 4950 directs the banking agencies to study ways to promote the establishment of new banks and credit unions, including community development financial institutions, CDFIs, and minority financial institutions.

This bill requires the banking agencies to report to this body, the Congress, on challenges faced by proposed depository institutions and to develop a strategic plan to promote establishment of new financial institutions.

The banking agencies will provide the Congress with recommendations on how best to propose financial institutions and help them navigate that regulatory process.

H.R. 4950 is a first step toward identifying and addressing the challenges posed to the chartering of new banks and credit unions.

The fact is, Madam Speaker, encouraging the establishment of de novo financial institutions will help fill the needs left by bank consolidations and bank closures over the past decade. This will increase banking options and competition to better serve families, small businesses, and our local communities. The loss of local banks and credit unions has disproportionately affected rural communities.

Republicans support efforts to better understand the challenges that prospective de novo depository institutions face and identifying the solutions to promote a greater number of new charters.

I urge my colleagues to support this bill, and I reserve the balance of my time.

Madam Speaker, let me thank my friend from Massachusetts for his passion on this. I spent the better part of half of my career in community banking, and I know the consolidation, how it has impacted, particularly, rural counties that no longer have a banking office.

And I also know how the regulatory burden has raised the immense costs of trying to form a new de novo banking corporation. It is just putting it out of reach of many, many groups of civic leaders, entrepreneurs, local people and, certainly, those trying to form a minority depository institution, or a CDFI.

So I commend my friend from Massachusetts for his work on this bill. It does have bipartisan support. I urge my colleagues to support it.

In conclusion, Madam Speaker, I include in the Record a letter to the Speaker and the minority leader, in addition to the chair and ranking member of the House Financial Services Committee from the Independent Community Bankers of America expressing their full support of H.R. 4590.

Independent Community

Bankers of America,

July 26, 2022.

Re Support for the Promoting New and Diverse Depository

Institutions Act (H.R. 4590).

Hon. Nancy Pelosi,

Speaker, House of Representatives,

Washington, DC.

Hon. Maxine Waters,

Chairwoman, Committee on Financial Services,

House of Representatives,

Washington, DC.

Hon. Kevin McCarthy,

Minority Leader,

House of Representatives,

Washington, DC.

Hon. Patrick McHenry,

Ranking Republican, Committee on Financial Services,

House of Representatives,

Washington, DC.

Dear Speaker Pelosi, Minority Leader McCarthy, Chairwoman

Waters, and Ranking Member McHenry:

On behalf of community banks across the country, with

nearly 50,000 locations, I write to thank you for scheduling

floor consideration of the Promoting New and Diverse

Depository Institutions Act (H.R. 4590), sponsored by Rep.

Jake Auchincloss, and to express our support for this

legislation. ICBA urges all Members of the House to vote YES

on H.R. 4590.

The Promoting New and Diverse Depository Institutions Act

requires the Federal banking regulators to conduct a joint

study to assess the challenges faced by proposed depository

institutions, including proposed minority depository

institutions (MDIs), seeking de novo depository institution

charters and to provide legislative recommendations to help

these proposed institutions successfully obtain charters.

There has been a dearth of de novo charters in the past

decade. An infusion of new charters is needed to offset

consolidation in the banking sector and create a competitive

landscape that will benefit consumers and small businesses

alike. Notably, new community bank charters, including new

MDI charters, are needed to provide access to capital and

banking services that play a pivotal role in reaching

unbanked populations and underserved communities across the

nation.

Concrete, actionable proposals are needed to turn the tide

of stagnant de novo bank formation. ICBA supports an array of

measures, such as phasing in capital standards for de novo

banks over a period of three years and allowing for greater

flexibility to modify the de novo business plan as conditions

warrant. Start-up capital is often the greatest impediment to

forming a new bank, and these provisions, among others, would

help spur the creation of de novo charters, including MDIs.

Thank you for your consideration. ICBA looks forward to

working with you to advance H.R. 4590 into law.

Sincerely,

Rebeca Romero Rainey,

President & CEO.

Madam Speaker, I yield back the balance of my time.

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 4590) to require the Federal banking regulators to jointly conduct a study and develop a strategic plan to address challenges faced by proposed depository institutions seeking de novo depository institution charters; and for other purposes, as amended.

Madam Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks on this legislation and to insert extraneous material thereon.

Madam Speaker, I yield myself such time as I may consume.

Madam Speaker, I support H.R. 4590, the Promoting New and Diverse Depository Institutions Act, sponsored by Representative Jake Auchincloss, the vice chair of the Financial Services Committee.

Since the 1980s, we have seen steady consolidation in the number of U.S. depository institutions from having roughly 33,000 banks and credit unions in 1980 to less than 10,000 today. Over the last decade, we have also seen a reduction of 3,300 branches by the four largest banks leaving behind banking deserts where residents lack access to a nearby branch for basic banking services.

I have also been troubled by the recent decline of roughly one-third of all minority depository institutions, also known as MDIs, and more than half of Black-owned banks since the 2008 financial crisis.

In December 2020, I was pleased to work with Ranking Member McHenry and Senators Brown, Crapo, and Warner to reach a bipartisan deal to provide $12 billion in capital investments and grants to shore up and strengthen existing MDIs as well as community development financial institutions, better known as CDFIs.

But I am still concerned that very few depository institutions, especially MDIs, have been newly chartered in recent years while banking deserts continue to grow. This bill would help address this concern by requiring regulators to study this problem, request feedback from the public, and develop a strategic plan so they can take steps to encourage the creation of new banks and credit unions, including MDIs and CDFIs.

H.R. 4590 also requires regulators to share with Congress any legislative recommendations to further promote the creation of new depository institutions, again, including MDIs and CDFIs.

So I thank Vice Chair Auchincloss for his work on this bill which received bipartisan support in our committee.

Madam Speaker, I urge my colleagues to support H.R. 4590, and I reserve the balance of my time.

Madam Speaker, I yield 2 minutes to the gentleman from

Massachusetts (Mr. Auchincloss), who is also the vice chair of the Financial Services Committee.

Madam Speaker, I yield myself the balance of my time.

H.R. 4590 is supported by a wide range of stakeholders, including California & Nevada Credit Union Leagues, Community Development Bankers Association, Inclusiv, Independent Community Bankers Association, and many others.

I urge my colleagues to support this bill, and I yield back the balance of my time.

Madam Speaker, I will begin by thanking the Chairwoman of the Financial Services Committee for her support of this legislation and for her career-long support for financial access and inclusion; and, also, my colleague from Arkansas' support to make this a bipartisan initiative.

Madam Speaker, our economy has not always worked for all communities equally. This is evident in the glaring wealth disparities for American families emphasized in the 2019 survey of Consumer Finances Federal Reserve Report.

One way to address these issues is to ensure access to diverse and affordable financial services that can help individuals save money and help small businesses raise capital. That is why I urge my colleagues to vote for my bill, the Promoting New and Diverse Depository Institutions Act.

Over the last several decades, there has been consolidation among banks and credit unions. This has effectively limited the products available to consumers and artificially driven up costs while closing banking branches for people who already did not have many choices.

My bipartisan bill is the first step to increasing the supply of banking services by directing banking regulators to work together to address the challenges that new depository institutions, including MDIs and CDFIs, face when applying for a charter.

Starting and maintaining a new bank or credit union is hard work. It is the banking regulators' responsibility to measure and mitigate the challenges that new banks face.

MDIs and CDFIs play a unique and vital role in our financial system and often have a close relationship with their consumers. By investing in and supporting MDIs and CDFIs, Congress can foster economic opportunities for people who otherwise are unable to access affordable banking services in a system that is already restricted and restrictive.

My bill will help new banks, and in so doing, it will expand access to affordable services for unbanked communities. I believe this bill is a necessary step toward advancing economic equality in our country, and I ask your help to ensure that all Americans have access to affordable banking services regardless of their address.