U.S. Rep. Andy Barr (R-KY) on Friday introduced legislation he said would “kickstart the economic recovery in underserved areas” by relaxing regulation hindering new bank charters.
The “Promoting Access to Capital in Underbanked Communities Act of 2021” would require federal banking agencies to establish a three-year phase-in period for de novo financial institutions to comply with Federal capital standards and ease restrictions places on those banks.
Barr’s office said in a press release, bank consolidation has left many communities without access to bank branches and that the current regulations are to blame for the lack of new bank formation. Barr introduced similar legislation in September of 2020 where it was referred to the House Committee on Financial Services but did not make it to the floor of the House.
“The key to economic growth and recovery throughout the country is having access to capital for individuals, families, and small business entrepreneurs,” Barr said. “My proposal rolls back government onerous regulations and paves the way for investment to flood into underserved communities to make sure that the economic recovery is not uneven.”
The bill is supported by the American Bankers Association and Independent Community Bankers of America.
“We thank Congressman Barr for introducing this critically important legislation, which would help ensure that all Americans continue to enjoy the many benefits of a local bank,” the American Bankers Association said in a statement. “By making it easier for new banks to launch in rural areas of the country, this legislation expands banking access for individuals and businesses, which translates into greater economic activity and growth. The temporary regulatory adjustments provided in this bill are a reasonable step to encourage de novo formation that will benefit local economies.”
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