On February 9, the House of Representatives passed the “Housing for the 21st Century Act” by a vote of 390-9. The bill contains a number of provisions of interest to community banks, some of which are summarized below. The bill also contains several provisions affecting the resolution of failing banks and creation of new banks. Other provisions seek to incentivize greater levels of housing production and increase financing availability.
The following are four provisions of particular interest to community banks in the House-passed “Housing for the 21st Century Act”:
Public Welfare Investments: Allows the Comptroller of the Currency and the Board of Governors of the Federal Reserve System to increase, from 15% to 20%, the aggregate amounts of investments that a national banking association and a state member bank may make to promote the public welfare.
Brokered Deposits: Establishes that custodial deposits of an insured depository institution are not considered to be brokered deposits if the total amount does not exceed 20% of an institution’s total liabilities and the institution has less than $10 billion in assets. The bill also modifies the amounts of reciprocal deposits of an insured depository institution that are not considered to be brokered deposits under a graduated scale based on an institution’s total liabilities. The institution is also required to be well-capitalized and receive strong supervisory ratings from their regulators.
Community Bank Examination Relief: Provides well-managed and well-capitalized financial institutions with assets under $6 billion targeted regulatory relief by instituting alternating limited-scope examinations and allowing institutions to opt into combining their safety and soundness, information technology, cybersecurity, and consumer compliance exams to streamline oversight and reduce burdens.
Exam Cycles for Community Banks: Raises the consolidated asset threshold from $3 billion to $6 billion for insured depository institutions to qualify for an 18- month examination cycle.
A separate housing bill is pending in the Senate, “The Renewing Opportunity in the American Dream (ROAD) to Housing Act of 2025.” The Senate bill contains one provision of particular interest to community banks – an increase, from 15% to 20%, the aggregate amounts of investments that national and state members banks may make to promote the public welfare. As currently written, the Senate bill does not include provisions pertaining to the resolution of failed banks, incentives to create new banks, brokered deposits, or bank regulatory agency examinations.
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About the author: Mr. Wides is a leader in Artisan Advisors’ risk management practice. Mr. Wides previously served as Deputy Comptroller for Community Affairs in OCC’s Bank Supervision Policy Department. He can be reached at [email protected].