H.R. 478 · On the floor · Finance and Financial Sector

Promoting New Bank Formation Act

Sponsor: Andy Barr (R-KY)

What it does

• Requires federal banking agencies to issue rules allowing new depository institutions three years to meet capital requirements instead of shorter current timelines.
• Permits new depository institutions to request deviations from their approved business plans, with agencies required to decide within 30 days.
• Reduces the community bank leverage ratio to 8% for new rural community depository institutions during a three-year phase-in period, reverting to 9% thereafter.
• Removes restrictions on federal savings associations' ability to invest in, sell, or deal in agricultural loans.

Official summary

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.

Latest action

May 6, 2025: Placed on the Union Calendar, Calendar No. 64.

Committee: House Financial Services