The U.S. House of Representatives unanimously passed legislation on Tuesday sponsored by Rep. Scott Tipton, R-Cortez, that would ease regulatory burdens on well-managed community banks.
Under the Small Bank Exam Cycle Reform Act, H.R. 1553, banks with under $1 billion in total assets would be eligible for an 18-month bank examination cycle by the Office of the Comptroller of the Currency. The act was drafted in response to legislative ideas sent by the comptroller’s office in February to the House Financial Services Committee.
The legislation, which Tipton introduced in March, amends the Federal Deposit Insurance Act to raise the asset threshold from $500 million and the examination period from a 12-month cycle. Under the current regulations, only banks with assets below $500 million are eligible for an 18-month cycle.
According to Tipton, the reform would allow an additional 676 U.S. banks to qualify for a longer exam cycle and would provide smaller banks with regulatory relief from the time and costs associated with the process.
“These examinations require significant preparation leading up to the examination as well as attention to the on-site examiner during the exam itself,” Tipton said. “Whereas larger banks can absorb the work hours and compliance costs associated with these on-site examinations, community banks, much smaller institutions, do not have the economy of scale to deflect the burden.”
The legislation, which included 19 bipartisan cosponsors, passed the House with a 411 to 0 vote and now heads to the Senate.
The Small Bank Exam Cycle Reform Act is one of several bills that Tipton has introduced in the House to ease regulatory burdens on community banks.
“In rural areas such as my district in western Colorado, oftentimes the only access to credit for small businesses is a community bank,” Tipton said. “Unfortunately, rising compliance costs and complicated regulatory requirements have dried up bank credit for those that need it most.”
Edward Graham is a student at American University in Washington, D.C., and an intern with The Durango Herald.
