In First Full Committee Hearing, Financial Services Examines Opportunities to Make Community Banking Great Again
Washington,
February 5, 2025 -
Today, the House Financial Services Committee, led by Chairman French Hill (AR-02), held a hearing examining the current landscape of community banking in the United States, including how community banks serve as the lifeblood for many local communities.
“Community banks know their communities best and research shows that when they close their doors, Americans suffer. Right now, our community banks are disappearing across the country,” said Chairman Hill. “That’s why last November, I released my principles on how we can 'Make Community Bank Great Again' – 30-plus banking reform ideas to enhance their ability to serve their customers, attract investment, adopt and deploy technology, and to thrive and grow along with their communities. This Committee will seek to promote regulatory fairness, transparency, and right-sizing; encourage bank health, sound growth, and competition; and improve access to funding and capital for our community banks.”
As part of today’s hearing, the Committee reviewed several bills to improve the regulatory landscape and provide solutions to the many challenges faced by community banks.
“Throughout my time in Congress, I have pushed for changes to regulatory landscape that promote competition, ensure rightsizing, and hold regulators accountable,” said Subcommittee on Financial Institutions Chairman Andy Barr (KY-06). “I was proud to reintroduce H.R. 478, the “Promoting New Bank Formation Act,” my bill to reduce burdensome initial capital requirements and lending restrictions that have made de novo bank formation all but nonexistent over the last decade.”
“I have been consistently hearing from small community bankers back in my district, and across the country, about how they are concerned with the complicated reporting requirements in this Rule [CFPB’s Section 1071 Small Business Data Collection rule] that will tie up loan officers and increase compliance costs. Ultimately, forcing bankers to pass these costs down to their customers,” said Rep. Roger Williams (TX-25). “I proudly introduced the1071 Repeal to Protect Small Business Lending Act, which repeals the 1071 small business loan data collection requirement to help eliminate costly regulatory burdens on financial institutions.”
Witnesses echoed their support for the work of the Committee.
Cathy Owen, Executive Chairman, Eagle Bank & Trust Company, commented, “Banks of all sizes and business models are drivers of healthy growth across our economy. Community banks are a very important part of this ecosystem and play a crucial role in both our local communities and national economy. … We appreciate and strongly support the goals of the Chairman Hill’s ‘Principles to Make Banking Great Again.’”
Susannah Marshall, Bank Commissioner, Arkansas State Bank Department, added, “These banks [community banks] are not just the economic bedrock of their communities, but they also form the solid foundation of the overall U.S. economy. … Today’s hearing comes at a critical time for the community banking system. Without collective action from Congress and the federal banking agencies, we will continue to lose community banks at an alarming rate and the communities that depend on their financial services will struggle to find suitable alternatives. Working together, we can establish a regulatory and supervisory environment that allows these cornerstones of the economy to not just survive, but to thrive.”
Rebecca Romero Rainey, President and CEO, Independent Community Bankers of America, noted, “I’m delighted that we share a commitment to a future of great community banks. Our nation’s prosperity depends on them. The new Congress and Administration present an opportunity to transform the regulatory environment for community banks, sparking economic growth in rural, suburban, and urban markets.”
Patrick J. Kennedy, Jr., Founding Partner, Kennedy Sutherland LLP, said, “While there are many other laudable initiatives identified by the Chairman, I want to underscore the importance of encouraging and allowing responsible innovation by community banks. Financial technology has and will continue to create substantial value for the industry through efficiency and reduction in costs for all. This is an important means to cope with the ever-growing regulatory burdens experienced throughout all American business and importantly within the banking community. It is extremely important for the industry to have an appropriate regulatory framework and guidance to permit and encourage innovation.”
