Promoting New Bank Formation Act

Promoting New Bank Formation Act

This bill eliminates and reduces certain requirements applicable to new depository institutions, certain rural community depository institutions, and federal savings associations.

Federal banking agencies must issue rules allowing a new depository institution or depository institution holding company three years to meet capital requirements. During this period, a depository institution or its depository institution holding company may request to deviate from an approved business plan, and the appropriate agency has 30 days to approve or deny the request.

In addition, the community bank leverage ratio—a way of evaluating debt levels—is reduced for new rural community depository institutions. Specifically, new rural community depository institutions must have a ratio of 8%, with a three-year phase-in of the rate. After this period, the ratio rises to its current level of 9%. 

Finally, the bill removes certain restrictions to allow federal savings associations to invest in, sell, or otherwise deal in agricultural loans.

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 478 Introduced in House (IH)]

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119th CONGRESS
  1st Session
                                H. R. 478

 To require the appropriate Federal banking agencies to establish a 3-
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 for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 16, 2025

   Mr. Barr introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
 To require the appropriate Federal banking agencies to establish a 3-
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 for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Promoting New Bank Formation Act''.

SEC. 2. PHASE-IN OF CAPITAL STANDARDS.

    The Federal banking agencies shall issue rules that provide for a 
3-year phase-in period for a depository institution or depository 
institution holding company to meet any Federal capital requirements 
that would otherwise be applicable to the depository institution or 
depository institution holding company, beginning on--
            (1) the date on which the depository institution became an 
        insured depository institution; or
            (2) in the case of a depository institution holding 
        company, the date on which the depository institution 
        subsidiary of the depository institution holding company became 
        an insured depository institution.

SEC. 3. CHANGES TO BUSINESS PLANS.

    (a) In General.--During the 3-year period beginning on the date on 
which a depository institution became an insured depository 
institution, the insured depository institution or its depository 
institution holding company may request to deviate from a business plan 
that has been approved by the appropriate Federal banking agency by 
submitting a request to such agency pursuant to this section.
    (b) Review of Changes.--An appropriate Federal banking agency 
shall, not later than the end of the 30-day period beginning on the 
receipt of a request under subsection (a)--
            (1) approve, conditionally approve, or deny such request; 
        and
            (2) notify the applicant of such decision and, if the 
        agency denies the request--
                    (A) provide the applicant with the reason for such 
                denial; and
                    (B) suggest changes to the request that, if 
                adopted, would allow the agency to approve such 
                request.
    (c) Result of Failure To Act.--If an appropriate Federal banking 
agency fails to approve or deny a request within the 30-day period 
required under subsection (b), such request shall be deemed to be 
approved.

SEC. 4. RURAL COMMUNITY DEPOSITORY INSTITUTION LEVERAGE RATIO.

    (a) In General.--During the 3-year period beginning on the date on 
which a rural depository institution became an insured depository 
institution, the Community Bank Leverage Ratio for the rural community 
bank shall be 8 percent.
    (b) Phase-In Authority.--The Federal banking agencies shall issue 
rules to phase-in the Community Bank Leverage Ratio described under 
subsection (a) with respect to a rural depository institution by 
setting lower Community Bank Leverage Ratio percentages during the 
first 2 years of the 3-year period described under subsection (a).
    (c) Definitions.--In this section:
            (1) Community bank leverage ratio.--The term ``Community 
        Bank Leverage Ratio'' has the meaning given that term under 
        section 201(a) of the Economic Growth, Regulatory Relief, and 
        Consumer Protection Act (12 U.S.C. 5371 note).
            (2) Rural depository institution.--The term ``rural 
        depository institution'' means a depository institution--
                    (A) with total consolidated assets of less than 
                $10,000,000,000; and
                    (B) located in a rural area, as defined under 
                section 1026.35(b)(iv)(A) of title 12, Code of Federal 
                Regulations.

SEC. 5. AGRICULTURAL LOAN AUTHORITY FOR FEDERAL SAVINGS ASSOCIATIONS.

    Section 5(c) of the Home Owners' Loan Act (12 U.S.C. 1464(c)) is 
amended--
            (1) in paragraph (1), by adding at the end the following:
                    ``(V) Agricultural loans.--Secured or unsecured 
                loans for agricultural purposes.''; and
            (2) in paragraph (2)(A), by striking ``business, or 
        agricultural'' and inserting ``or business''.

SEC. 6. STUDY ON DE NOVO INSURED DEPOSITORY INSTITUTIONS.

    (a) Study.--The Federal banking agencies shall, jointly, carry out 
a study on--
            (1) the principal causes for the low number of de novo 
        insured depository institutions in the 10-year period ending on 
        the date of enactment of this Act; and
            (2) ways to promote more de novo insured depository 
        institutions in areas currently underserved by insured 
        depository institutions.
    (b) Report to Congress.--Not later than the end of the 1-year 
period beginning on the date of enactment of this Act, the Federal 
banking agencies shall, jointly, issue a report to Congress containing 
all findings and determinations made in carrying out the study required 
under subsection (a).

SEC. 7. DEFINITIONS.

    In this Act, the terms ``appropriate Federal banking agency'', 
``depository institution'', ``depository institution holding company'', 
``Federal banking agency'', and ``insured depository institution'' have 
the meaning given those terms, respectively, under section 3 of the 
Federal Deposit Insurance Act.
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