HR 6955: Main Street Capital Access Act

HR 6955 in plain English: The Main Street Capital Access Act would reduce and modify federal banking regulations affecting community and rural banks, including rules on bank formation, mergers, and oversight. New banks would have a three-year phase-in period for certain capital requirements, and asset thresholds that trigger various regulatory requirements would be raised so that more smaller institutions are exempt. The bill also requires federal financial regulators to tailor their rules to limit burdens on institutions and to review their regulations more frequently.

Stated purpose

The bill aims to reduce and adjust federal banking regulations to make it easier to start new banks, ease the regulatory burden on smaller and community banks, and improve the clarity and fairness of the bank oversight and merger approval process.

Key points

• Gives new banks a three-year phase-in period to meet certain capital requirements.
• Raises the asset threshold for Federal Reserve Board merger approval to $6 billion, allowing more acquisitions without board sign-off.
• Allows banks with $6 billion or less in assets to qualify for longer or alternating limited-scope examination cycles.
• Caps annual loan guarantees under one program at $1 billion, with a minimum guarantee of $25 million per transaction.
• Requires regulators to tailor rules to institutions' risk profiles and review regulations more frequently.

Arguments supporters make

• Lighter rules on small and community banks let them focus resources on lending to local businesses and households instead of compliance paperwork.
• Making it easier to open new banks increases competition and gives underserved communities more access to financial services.
• Requiring regulators to tailor oversight to a bank's actual risk level makes supervision more fair and efficient, rather than applying one-size-fits-all rules.

Arguments opponents make

• Allowing bank mergers to be approved without reviewing whether they reduce competition could lead to more consolidation and fewer choices for consumers and small businesses.
• Raising the thresholds that trigger oversight and lowering capital requirements for smaller banks could leave the financial system more vulnerable if those banks run into trouble.
• Easing rules that were put in place after past financial crises may reduce the safeguards that protect ordinary depositors and taxpayers from bank failures.

Tradeoffs

Reducing regulatory burdens on banks may help more people access credit and encourage new bank formation, but it also means less oversight of the risks banks take on and fewer checks on mergers that could reduce local competition.

Current status in Congress: Passed House.

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