H.R. 478

119th CONGRESS 1st Session

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 · Sponsor: Mr. Barr · Committee: Committee on Financial Services

Table of contents

• H.R. 478
  • SEC. 1. Short title
  • SEC. 2. Phase-in of capital standards
  • SEC. 3. Changes to business plans
  • SEC. 4. Rural community depository institution leverage ratio
  • SEC. 5. Agricultural loan authority for Federal savings associations
  • SEC. 6. Study on de novo insured depository institutions
  • SEC. 7. Definitions

SEC. 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—
  • the date on which the depository institution became an insured depository institution; or
  • 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
  • The 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)—
    • approve, conditionally approve, or deny such request; and
    • notify the applicant of such decision and, if the agency denies the request—
      • provide the applicant with the reason for such denial; and
      • 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:
    • 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 ( note). 12 U.S.C. 5371
    • The term rural depository institution means a depository institution—

SEC. 5. Agricultural loan authority for Federal savings associations

• Section 5(c) of the Home Owners’ Loan Act () is amended— 12 U.S.C. 1464(c)
  • (V) Agricultural loans
    • Secured or unsecured loans for agricultural purposes.
  • in paragraph (1), by adding at the end the following:
  • in paragraph (2)(A), by striking business, or agriculturaland 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—
    • 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
    • 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 , , , , and have the meaning given those terms, respectively, under section 3 of the Federal Deposit Insurance Act. Federal banking agency insured depository institution appropriate Federal banking agency,depository institution,depository institution holding company