Promoting Access to Capital in Underbanked Communities Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 2561 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 APRIL 15, 2021 Mr. BARR introduced the following bill; which was referred to the Committee on Financial Services A BILL To require the appropriate Federal banking agencies to es- tablish 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. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Promoting Access to 4 Capital in Underbanked Communities Act of 2021’’. 5 SEC. 2. FINDINGS. 6 The Congress finds the following: 7 VerDate Sep 11 2014 21:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2561.IH H2561 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 2561 IH (1) Trends in bank closures and consolidation 1 have left many communities without access to bank- 2 ing services and disproportionately impact under- 3 served rural and urban communities. 4 (2) De novo bank formation has slowed signifi- 5 cantly following the financial crisis. 6 (3) A November 2019 report by the Federal 7 Reserve System found that 44 counties in the U.S. 8 were ‘‘deeply affected’’ by trends in bank closures 9 and consolidation (i.e., had fewer than 10 branches 10 in 2012 and lost at least 50 percent of them by 11 2017). 12 (4) 89 percent of the deeply affected counties 13 were rural. 14 (5) Rural counties deeply affected by branch 15 closures had higher poverty rates, lower median in- 16 come, and a higher share of their population were 17 African American compared to all rural commu- 18 nities. 19 SEC. 3. PHASE-IN OF CAPITAL STANDARDS. 20 The appropriate Federal banking agencies shall issue 21 rules that provide for a 3-year phase-in period for a finan- 22 cial institution to meet any Federal capital requirements 23 that would otherwise be applicable to the financial institu- 24 tion, where such 3-year period begins on the date on which 25 VerDate Sep 11 2014 21:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2561.IH H2561 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 2561 IH the deposit insurance that the financial institution has ob- 1 tained from the Federal Deposit Insurance Corporation 2 becomes effective. 3 SEC. 4. CHANGES TO BUSINESS PLANS. 4 (a) IN GENERAL.—During the 3-year period begin- 5 ning on the date on which the deposit insurance that the 6 financial institution has obtained from the Federal De- 7 posit Insurance Corporation becomes effective, a financial 8 institution may request to deviate from a business plan 9 that has been approved by the appropriate Federal bank- 10 ing agency by submitting a request to such agency pursu- 11 ant to this section. 12 (b) REVIEW OF CHANGES.—An appropriate Federal 13 banking agency shall, not later than the end of the 30- 14 day period beginning on the receipt of a request under 15 subsection (a)— 16 (1) approve, conditionally approve, or deny such 17 request; and 18 (2) notify the financial institution of such deci- 19 sion and, if the agency denies the request— 20 (A) provide the financial institution with 21 the reason for such denial; and 22 (B) suggest changes to the request that, if 23 adopted, would allow the agency to approve 24 such request. 25 VerDate Sep 11 2014 21:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2561.IH H2561 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 2561 IH (c) RESULT OF FAILURE TO ACT.—If an appropriate 1 Federal banking agency fails to approve or deny a request 2 within the 30-day period required under subsection (b), 3 such request shall be deemed to be approved. 4 SEC. 5. RURAL COMMUNITY BANK LEVERAGE RATIO. 5 (a) IN GENERAL.—During the 3-year period begin- 6 ning on the date on which the deposit insurance that a 7 rural community bank has obtained from the Federal De- 8 posit Insurance Corporation becomes effective, the Com- 9 munity Bank Leverage Ratio for the rural community 10 bank shall be 8 percent. 11 (b) PHASE-IN AUTHORITY.—The Federal banking 12 agencies shall issue rules to phase-in the Community Bank 13 Leverage Ratio described under subsection (a) with re- 14 spect to a rural community bank by setting lower Commu- 15 nity Bank Leverage Ratio percentages during the first 2 16 years of the 3-year period described under subsection (a). 17 (c) DEFINITIONS.—In this section: 18 (1) COMMUNITY BANK LEVERAGE RATIO.—The 19 term ‘‘Community Bank Leverage Ratio’’ has the 20 meaning given that term under section 201(a) of the 21 Economic Growth, Regulatory Relief, and Consumer 22 Protection Act (12 U.S.C. 5371 note). 23 (2) FEDERAL BANKING AGENCY.—The term 24 ‘‘Federal banking agency’’ has the meaning given 25 VerDate Sep 11 2014 21:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2561.IH H2561 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 2561 IH that term under section 3 of the Federal Deposit In- 1 surance Act (12 U.S.C. 1813). 2 (3) RURAL COMMUNITY BANK.—The term 3 ‘‘rural community bank’’ means a financial institu- 4 tion— 5 (A) with total consolidated assets of less 6 than $10,000,000,000; and 7 (B) located in a rural area, as defined 8 under section 1026.35(b)(iv)(A) of title 12, 9 Code of Federal Regulations. 10 SEC. 6. AGRICULTURAL LOAN AUTHORITY FOR FEDERAL 11 SAVINGS ASSOCIATIONS. 12 Section 5(c) of the Home Owners’ Loan Act (12 13 U.S.C. 1464(c)) is amended— 14 (1) in paragraph (1), by adding at the end the 15 following: 16 ‘‘(V) AGRICULTURAL LOANS.—Secured or 17 unsecured loans for agricultural purposes.’’; and 18 (2) in paragraph (2)(A), by striking ‘‘business, 19 or agricultural’’ and inserting ‘‘or business’’. 20 SEC. 7. STUDY ON DE NOVO FINANCIAL INSTITUTION. 21 (a) STUDY.—The appropriate Federal banking agen- 22 cies shall, jointly, carry out a study on— 23 VerDate Sep 11 2014 21:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2561.IH H2561 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 2561 IH (1) the principal causes for the low number of 1 de novo financial institutions in the 10-year period 2 ending on the date of enactment of this Act; and 3 (2) ways to promote more de novo financial in- 4 stitutions in areas currently underserved by financial 5 institutions. 6 (b) REPORT TO CONGRESS.—Not later than the end 7 of the 1-year period beginning on the date of enactment 8 of this Act, the appropriate Federal banking agencies 9 shall, jointly, issue a report to Congress containing all 10 findings and determinations made in carrying out the 11 study required under subsection (a). 12 SEC. 8. DEFINITIONS. 13 In this Act: 14 (1) FINANCIAL INSTITUTION.—The term ‘‘fi- 15 nancial institution’’ means a depository institution 16 or depository institution holding company. 17 (2) OTHER BANKING TERMS.—The terms ‘‘ap- 18 propriate Federal banking agency’’, ‘‘depository in- 19 stitution’’, and ‘‘depository institution holding com- 20 pany’’ have the meaning given those terms, respec- 21 tively, under section 3 of the Federal Deposit Insur- 22 ance Act. 23 Æ VerDate Sep 11 2014 21:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H2561.IH H2561 pbinns on DSKJLVW7X2PROD with BILLS