Sponsors (2)
The bill reduces exam frequency, length, and operational disruption for community banks and credit unions and increases predictability and transparency, but that relief comes with a trade-off: lower on-site scrutiny and vague implementation standards that could delay detection of problems, weaken consumer protections, and raise local financial risk.
Small community banks and credit unions (≤ $6B) will face fewer and shorter on-site full-scope exams, reducing compliance costs and staff disruption and making exam schedules more predictable.
Agencies must adopt rules that balance streamlined exam cycles with safety-and-soundness oversight, preserving tools to intervene when risks appear.
Institutions can request combined safety, consumer compliance, and IT/cyber exams, which can streamline oversight and reduce duplicated reviews.
Reduced on-site scrutiny and greater advance notice may delay detection of emerging risks or concealed problems at smaller institutions, increasing the chance of depositor losses or local financial distress.
Streamlined or combined exams could weaken consumer-protection scrutiny, allowing compliance issues to be missed and increasing the risk of consumer harm.
With fewer or lighter exams, some smaller institutions might redirect savings into riskier activities, raising the potential for systemic or local financial instability.
Based on analysis of 3 sections of legislative text.
Allows alternating limited-scope exams and combined exam options for well-managed, well-capitalized banks and credit unions with ≤ $6B in assets and sets examiner-practice and reporting requirements.
Official title: Supervisory Modifications for Appropriate Risk-based Testing Act of 2025
Introduced July 16, 2025 by William R. Timmons · Last progress May 13, 2026
Requires insured banks and federally insured credit unions with $6 billion or less in assets that are "well managed and well capitalized" to receive alternating limited-scope examinations after a full-scope on-site exam and allows those institutions, on request, to combine safety-and-soundness, consumer compliance, and IT/cybersecurity exams. It also directs federal banking agencies and the NCUA to adopt implementing rules within 12 months, to preserve authority to conduct full or targeted exams when needed, and to report annually to Congress on examiner experience, examiner counts, and average on-site time for affected institutions. Sets new on-site exam practices for small institutions: examinations should be led by experienced examiners, use the fewest examiners and shortest on-site time practicable, be scheduled at convenient times for the institution, and provide advance notice of anticipated issues. Agencies must publish aggregate annual metrics in reports to Congress about compliance with these practices.