HR 6955: Main Street Act

HR 6955 in plain English: The Main Street Act would reduce and modify federal banking regulations affecting bank formation, supervision, and mergers. It raises numerous asset-size thresholds—such as increasing several key thresholds from $250 billion to $370 billion and from $100 billion to $150 billion—so that more banks and financial holding companies are exempt from certain regulatory requirements. The bill also gives new banks a three-year phase-in for capital requirements, eases bank merger approval rules, and requires regulators to more frequently review their rules and tailor them to institutions' risk profiles.

Stated purpose

The bill aims to reduce and modify federal banking regulations to make it easier to form new banks, lower compliance burdens on community and rural banks, and improve access to capital for small financial institutions and the communities they serve.

Key points

• Raises key asset thresholds triggering enhanced oversight from $250 billion to $370 billion and from $100 billion to $150 billion
• Raises the threshold for Federal Reserve approval of holding company acquisitions from $10 billion to $15 billion in assets
• Gives newly formed banks a three-year phase-in period to meet certain capital requirements
• Allows bank mergers to be approved without regulators considering whether the merger is noncompetitive or monopolistic
• Raises the Community Reinvestment Act small-bank exemption threshold from $250 million to $800 million in assets

Arguments supporters make

• Smaller community banks are often buried in the same heavy rules as giant Wall Street banks, even though they pose far less risk — this bill right-sizes regulation so local banks can focus on serving their towns instead of filing paperwork.
• Making it easier and cheaper to open new banks means more communities, especially rural ones, can get access to loans and financial services they currently lack.
• Raising the dollar thresholds that trigger stricter rules is a common-sense update, since those thresholds were set years ago and have not kept pace with inflation or the growth of the banking industry.

Arguments opponents make

• Letting regulators approve bank mergers without checking whether they harm competition could lead to fewer choices and higher fees for customers, especially in small towns with limited banking options already.
• Easing capital requirements and supervision for newer and smaller banks could leave those institutions more vulnerable to failure, putting depositors and ultimately taxpayers at risk if the government must step in.
• Allowing small bank holding companies to carry higher debt levels and reducing how often banks are examined means problems may go undetected longer, increasing the chance of a financial crisis spreading before regulators can respond.

Tradeoffs

Reducing regulatory costs may help community banks grow and serve more customers, but loosening oversight and merger scrutiny could reduce competition and increase the risk of bank failures that harm depositors or require public bailouts.

Current status in Congress: In committee.

NewsClear — neutral news & congressional tracking · Bill of the Week