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May 12, 2026
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Download official House Record PDFReturn to issue contextSUPERVISORY MODIFICATIONS FOR APPROPRIATE RISK-BASED TESTING ACT OF
2025
Mr. HILL of Arkansas. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4437) to reduce the regulatory burden on certain well managed and well capitalized financial institutions, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 4437
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 “Supervisory Modifications
for Appropriate Risk-based Testing Act of 2025” or the
“SMART Act of 2025”.
SEC. 2. EXAMINATION RELIEF FOR CERTAIN WELL MANAGED AND WELL
CAPITALIZED FINANCIAL INSTITUTIONS.
(a) Insured Depository Institutions.—Section 10(d) of the
Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended
by adding at the end the following:
“(11) Examination relief for certain well managed and well
capitalized insured depository institutions.—
“(A) In general.—The following shall apply to a well
managed and well capitalized insured depository institution
with $6,000,000,000 or less in consolidated assets:
“(i) Alternating limited-scope examinations.—After an
insured depository institution receives a full-scope, on-site
examination from the appropriate Federal banking agency, the
next examination of the insured depository institution by the
appropriate Federal banking agency shall be a limited-scope
examination, as determined by the appropriate Federal banking
agency.
“(ii) Combined examinations.—If an insured depository
institution is otherwise subject to separate safety and
soundness examinations, consumer compliance examinations, and
information technology and cybersecurity examinations, the
appropriate Federal banking agency shall, upon request of the
insured depository institution, combine two or three such
examinations, as specified by the insured depository
institution, and carry them out at the same time.
“(B) Exception.—Subparagraph (A) shall not apply to an
insured depository institution if—
“(i) the insured depository institution is currently
subject to a formal enforcement proceeding or order by the
Corporation or the appropriate Federal banking agency; or
“(ii) a person acquired control of the insured depository
institution since the most recent full-scope, on-site
examination of the insured depository institution from the
appropriate Federal banking agency.
“(C) Rulemaking.—Not later than 12 months after the date
of enactment of this paragraph, the Federal banking agencies
shall issue rules to carry out subparagraph (A), including,
with respect to an insured depository institution described
under subparagraph (A), to—
“(i) establish procedures for the limited-scope
examinations described in subparagraph (A)(i);
“(ii) establish procedures for reviewing insured
depository institutions that—
“(I) experience material changes in financial condition or
operational risk profile between scheduled examinations; or
“(II) have failed to comply with Federal or State banking
laws and regulations; and
“(iii) balance the goals of streamlining the examination
cycle for individual insured depository institutions and
reducing unnecessary regulatory burdens while maintaining
sufficient oversight to ensure the continued safety and
soundness of the insured depository institutions and
compliance with all applicable laws and regulations.
“(D) Rule of construction.—Nothing in this paragraph may
be construed to limit the authority of a Federal banking
agency to conduct off-site monitoring, targeted reviews, or
additional full-scope, on-site examinations of an insured
depository institution if the Federal banking agency
determines such monitoring, reviews, or examinations are
necessary to ensure safety and soundness or compliance with
applicable laws.
“(E) Definitions.—In this paragraph:
“(i) Consumer compliance examination.—The term `consumer
compliance examination' means an examination to assess
compliance with the requirements of Federal consumer
financial law (as such term is defined in section 1002 of the
Consumer Financial Protection Act of 2010).
“(ii) Well capitalized.—The term `well capitalized' has
the meaning given that term in section 38(b).
“(iii) Well managed.—With respect to an insured
depository institution, the term `well managed' means that,
when the institution was most recently examined by the
appropriate Federal banking agency, the institution was found
to be well managed, and the institution's composite condition
was found to be satisfactory or outstanding.”.
(b) Insured Credit Unions.—Section 204 of the Federal
Credit Union Act (12 U.S.C. 1784) is amended by adding at the
end the following:
“(h) Examination Relief for Certain Well Managed and Well
Capitalized Insured Credit Unions.—
“(1) In general.—The following shall apply to a well
managed and well capitalized insured credit union with
$6,000,000,000 or less in consolidated assets:
“(A) Alternating limited-scope examinations.—After an
insured credit union receives a full-scope, on-site
examination from the National Credit Union Administration,
the next examination of the insured credit union by the
National Credit Union Administration shall be a limited-scope
examination, as determined by the National Credit Union
Administration.
“(B) Combined examinations.—If an insured credit union is
otherwise subject to separate safety and soundness
examinations, consumer compliance examinations, and
information technology and cybersecurity examinations, the
National Credit Union Administration shall, upon request of
the insured credit union, combine two or three such
examinations, as specified by the insured credit union, and
carry them out at the same time.
“(2) Exception.—Paragraph (1) shall not apply to an
insured credit union if the insured credit union is currently
subject to a formal enforcement proceeding or order by the
National Credit Union Administration.
“(3) Rulemaking.—Not later than 12 months after the date
of enactment of this subsection, the National Credit Union
Administration shall issue rules to carry out paragraph (1),
including, with respect to an insured credit union described
under paragraph (1), to—
“(A) establish procedures for the limited-scope
examinations described in paragraph (1)(A);
“(B) establish procedures for reviewing insured credit
unions that—
“(i) experience material changes in financial condition or
operational risk profile between scheduled examinations; or
“(ii) have failed to comply with Federal or State banking
laws and regulations; and
“(C) balance the goals of streamlining the examination
cycle for individual insured credit unions and reducing
unnecessary regulatory burdens while maintaining sufficient
oversight to ensure the continued safety and soundness of the
insured credit unions and compliance with all applicable laws
and regulations.
“(4) Rule of construction.—Nothing in this subsection may
be construed to limit the authority of the National Credit
Union Administration to conduct off-site monitoring, targeted
reviews, or additional full-scope, on-site examinations of an
insured credit union if the National Credit Union
Administration determines such monitoring, reviews, or
examinations are necessary to ensure safety and soundness or
compliance with applicable laws.
“(5) Definitions.—In this paragraph:
“(A) Consumer compliance examination.—The term `consumer
compliance examination'
means an examination to assess compliance with the
requirements of Federal consumer financial law (as such term
is defined in section 1002 of the Consumer Financial
Protection Act of 2010).
“(B) Well capitalized.—The term `well capitalized' has
the meaning given that term in section 216(c).
“(C) Well managed.—With respect to an insured credit
union, the term `well managed' means that, when the credit
union was most recently examined by the National Credit Union
Administration, the credit union was found to be well
managed, and the credit union's composite condition was found
to be satisfactory or outstanding.”.
SEC. 3. EXAMINATION PRACTICES.
(a) Insured Depository Institutions.—Section 10(d) of the
Federal Deposit Insurance Act (12 U.S.C. 1820(d)), as amended
by section 2(a), is further amended by adding at the end the
following:
“(12) Examination practices.—With respect to on-site
examination of an insured depository institution with less
than $6,000,000,000 in total assets, the appropriate Federal
banking agency shall—
“(A) ensure the examination is led by, to the maximum
extent practicable, an examiner with significant experience
as an examiner;
“(B) make every effort, to the maximum extent practicable,
to minimize the number of examiners utilized and the amount
of time spent at the institution to carry out the
examination;
“(C) make every effort, to the maximum extent practicable,
to schedule the examination at a time that is convenient for
the institution; and
“(D) to the maximum extent practicable, give the
institution advance notice of issues expected to be covered
in the examination.
“(13) Report.—In its annual report to Congress, each
Federal banking agency shall include—
“(A) information on how the agency is complying with
paragraphs (11) and (12); and
“(B) aggregate data summarizing the agency's examination
practices with respect to insured depository institutions
with less than $6,000,000,000 in total assets, including—
“(i) the average experience of examiners, including the
average number of years of examiner experience of those who
lead on-site examinations;
“(ii) the average number of examiners utilized; and
“(iii) the average amount of time the agency spends
visiting such institutions for on-site examinations.”.
(b) Insured Credit Unions.—Section 204 of the Federal
Credit Union Act (12 U.S.C. 1784), as amended by section
2(b), is further amended by adding at the end the following:
“(i) Examination Practices.—With respect to on-site
examination of an insured credit union with less than
$6,000,000,000 in total assets, the National Credit Union
Administration shall—
“(1) ensure the examination is led by, to the maximum
extent practicable, an examiner with significant experience
as an examiner;
“(2) make every effort, to the maximum extent practicable,
to minimize the number of examiners utilized and the amount
of time spent at the credit union to carry out the
examination;
“(3) make every effort, to the maximum extent practicable,
to schedule the examination at a time that is convenient for
the credit union; and
“(4) to the maximum extent practicable, give the credit
union advance notice of issues expected to be covered in the
examination.
“(j) Report.—In its annual report to Congress, the
National Credit Union Administration shall include—
“(1) information on how the Administration is complying
with subsections (h) and (i); and
“(2) aggregate data summarizing the Administration's
examination practices with respect to insured credit unions
with less than $6,000,000,000 in total assets, including—
“(A) the average experience of examiners, including the
average number of years of examiner experience of those who
lead on-site examinations;
“(B) the average number of examiners utilized; and
“(C) the average amount of time the Administration spends
visiting such credit unions for on-site examinations.”.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from Arkansas (Mr. Hill) and the gentlewoman from California (Ms. Waters) each will control 20 minutes.
The Chair recognizes the gentleman from Arkansas.
General Leave
Mr. HILL of Arkansas. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days to revise and extend their remarks and include extraneous material on this bill.
The SPEAKER pro tempore. Is there objection to the request of the gentleman from Arkansas?
There was no objection.
Mr. HILL of Arkansas. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise today in enthusiastic support of my friend from South Carolina (Mr. Timmons) and his SMART Act.
local communities across our Nation, often serving as the primary source of credit, particularly in rural and underserved communities.
hardworking Americans achieve homeownership and long-term financial stability.
outdated regulatory requirements. These unnecessary burdens divert time, staff, and resources away from lending and supporting their local economies and toward a check-the-box compliance process that does not make the financial system any safer or any sounder.
streamlining and simplifying limited-scope exams for smaller, well- capitalized, and well-managed institutions, while fully preserving the safety and soundness standards.
eliminates duplicative reviews, and frees community banks to focus on lending and those goals of serving their customers.
track record should not be subject to the same regulatory scrutiny as institutions that are under financial stress, poorly managed, or quite large and complex.
credit union examinations, encouraging Federal regulators to improve examination practices by assigning experienced examiners, minimizing unnecessary onsite disruptions, and ensuring exams are conducted in a more efficient and predictable manner.
harder for small public or privately held community banks and their credit union competitors to try to compete and serve their Main Street customer base.
strength of community institutions, keeps regulators focused on the areas of greatest risk, and supports a healthier, more balanced financial system for all Americans.
Mr. Speaker, I urge my colleagues to support the SMART Act, and I reserve the balance of my time.
{time} 1520
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in support of H.R. 4437, the Supervisory Modifications for Appropriate Risk-based Testing Act of 2025, sponsored by Representative Timmons and our Subcommittee on Financial Institutions Ranking Member (Mr. Foster). This is a good bipartisan bill that will support our community banks and our credit unions.
about their bank exams and ask how they might be streamlined. The bill provides these institutions with alternating full-scope and limited- scope opportunities.
unions must be well capitalized and well managed. For example, that means that in order to receive this relief, they cannot be subject to an enforcement order.
additional exams if something unexpected develops related to safety and soundness and ensure that these institutions are complying with the law.
to include my amendment to require the regulators have examiners with significant experience before they conduct exams of smaller banks and credit unions.
the institution to carry out an onsite exam to reduce the burden on smaller institutions.
year about these changes so we can understand how they are being implemented. If Members want to do something meaningful to help our community banks and credit unions, then I urge them to support this bill.
Mr. Speaker, I reserve the balance of my time.
Mr. HILL of Arkansas. Mr. Speaker, I include in the Record the CBO estimate for the bill.
————————————————————————————————————————————————————————————————————————————
Additional
Effect on direct information on direct Link to published
Bill Number Title spending Effect on revenues spending and revenue estimates
———————————————————————————————————————————————————————————————————————————— H.R. 4437.......................... SMART Act, as amended. Reduce by at least Increase by at least Would decrease net N/A
$500K. $500K. deficits by at least
tens of millions. ———————————————————————————————————————————————————————————————————————————— Source: Congressional Budget Office.
Mr. HILL of Arkansas. Mr. Speaker, I yield 2 minutes to the gentleman from South Carolina (Mr. Timmons), my friend and the chairman of the Subcommittee on Military and Foreign Affairs, and an outstanding, very active member of our House Committee on Financial Services.
Mr. TIMMONS. Mr. Speaker, I rise in support of my bill, H.R. 4437, the Supervisory Modifications for Appropriate Risk-based Testing Act, also known as the SMART Act. I am proud to partner with Representative Foster on this bipartisan legislation to provide targeted, risk-based regulatory relief for well-managed and well-capitalized financial institutions with assets under $6 billion.
institutions by allowing full scope onsite examinations every other cycle, alternating with more limited reviews focused on key risk areas. The bill also allows certain examinations, including safety and soundness, consumer compliance, and cybersecurity reviews to be conducted concurrently, reducing the burden of multiple overlapping examinations.
efficiency while preserving strong oversight and consumer protections. The SMART Act is built on a principle familiar in other regulated industries, including the restaurant sector, where institutions with a strong track record and demonstrated compliance benefit from a more streamlined oversight process. This legislation applies that same principle to financial supervision by recognizing that not all institutions present the same level of risk, and our regulatory framework should reflect that reality.
additional examinations whenever necessary. Institutions with recent enforcement actions or major changes in control would not qualify for this streamlined process. Smaller financial institutions are essential to local economies, helping finance small businesses, first homes, and community development projects across the country. This bill gives them greater capacity to serve their customers and communities while maintaining the strong safeguards that consumers expect and deserve.
Mr. Speaker, I urge my colleagues on both sides of the aisle to support this bipartisan legislation that promotes efficiency and smarter regulation.
Ms. WATERS. Mr. Speaker, I yield 4 minutes to the gentleman from Illinois (Mr. Foster).
Mr. FOSTER. Mr. Speaker, I rise in support of the bipartisan Supervisory Modifications for Appropriate Risk-based Testing Act, or SMART Act, which provides thoughtful examination relief to qualifying community banks and credit unions, while maintaining appropriate safeguards.
with fewer than $6 billion in assets to qualify for alternating full- and limited-scope examinations, provided that their prudential regulator gave them a strong review at their last full-scope examination, that they are not subject to an enforcement action, and that they have not recently merged, which often can be a challenging time for recently merged institutions.
also request that regulators combine certain types of exams so they can take place at the same time. Many employees of the smallest firms wear multiple hats and have daily duties outside of the examination process.
coordinate with regulators and spend more time working with the communities that they serve. It will also provide regulatory staff with greater flexibility to focus their limited resources on poorly rated institutions that need greater oversight.
available to well-managed and well-capitalized community banks and credit unions with fewer than $6 billion in assets that are in good standing with the regulatory agency, and the regulators will always be able to step in if there is a threat to the stability of a covered institution.
regulation which will rely, we hope, less on high-stakes, in-person examinations and more on automated electronically driven inspections that happen on a more continuous basis to deal with the challenges of the coming agentic world in finance.
Mr. Speaker, I am happy to co-lead this legislation, and I thank Mr. Timmons for his partnership on this bill. I encourage my colleagues to vote “yes.”
Ms. WATERS. Mr. Speaker, in closing, I yield myself the balance of my time.
Mr. Speaker, there is a lot that Congress can do to help our community financial institutions. This includes taking up deposit insurance reform bills like the ones that I and my committee Republicans have put forward. Increasing deposit insurance would help community banks and credit unions better compete for small businesses' deposits.
tried to advance this Congress, which were either handouts to our largest banks or rollbacks of vital consumer protections, H.R. 4437 focuses on helping our community banks and credit unions.
Mr. Speaker, I again urge my colleagues to support this bill, and I yield back the balance of my time.
Mr. HILL of Arkansas. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, I thank the gentleman from Illinois (Mr. Foster), who is the ranking member of our Subcommittee on Financial Institutions, working hand in glove with my friend from South Carolina (Mr. Timmons) who addressed the House. Together, they show the best of the Congress. They are focused on where the rubber hits the road for most all the customers in America, and that is our community banks.
about housing, you ought to be concerned about our Main Street community banks because they, Mr. Speaker, deliver. Six out of 10 home construction loans are made by those banks under $10 billion.
coordination. Examinations that give very targeted relief to the very best—well-capitalized, well-managed, unblemished, not connected to a merger or acquisition activity—community banks to let them better coordinate their routine exam process.
Mr. Speaker, I have worked at banks of that size, and I know the confusion of multiple exams that are uncoordinated between the agencies and come like waves, one after another, from which there is no relief. The same small compliance group dedicated in that bank under $6 billion is avalanched by these requests from the FDIC, the Federal Reserve, the OCC, the State Bank Department, the NASD, now FINRA for a broker dealer, a trust exam, an IT exam. There is no end to it.
entrepreneurially
owned Main Street banks under $6 billion as described by the gentleman from Illinois (Mr. Foster) and the gentleman from South Carolina (Mr. Timmons). It is a powerful change, Mr. Speaker, because probably 8 out of 10 banks in the country under $6 billion would meet that test. I am sure there are between 3,000 and 4,000 banks that meet the definitions in this bill. That is real regulatory relief for real bankers who are serving real customers on Main Street in America, and that is what we want. That leads to better outcomes, faster economic growth, and more revenues for our States and for our society.
Mr. Speaker, I encourage a strong “yes” vote on the work by Congressmen Timmons and Foster, and I yield back the balance of my time of my time.
{time} 1530
The SPEAKER pro tempore. The question is on the motion offered by the gentleman from Arkansas (Mr. Hill) that the House suspend the rules and pass the bill, H.R. 4437, as amended.
The question was taken; and (two-thirds being in the affirmative) the rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.