The American Bankers Association today endorsed legislation to spur the creation of new banks by easing federal capital requirements during their first few years of existence. The “Promoting New Bank Formation Act” would establish a three-year phase-in period for new banks to comply with federal capital standards and make other changes to ease the regulatory hurdles for young institutions. The bill has been reintroduced in the House by Rep. Andy Barr (R- Ky.) and in the Senate by Sen. Cindy Hyde-Smith (R-Miss.).
In a letter to the two members of Congress, ABA noted there are 4,316 fewer banks in the U.S. today than in 2005. Of the banks active today, only 79 were established after 2010.
“The bill would unlock economic opportunity, growth, and investment in communities most in need, while also promoting competition,” ABA said. “The temporary regulatory adjustments provided in this bill are a reasonable step to encourage de novo formation of banks that will be well equipped to serve and respond to the pressing banking and financial needs of their local communities.”