House Passes Housing Affordability Package with Community Bank Provisions
The U.S. House of Representatives made a significant move on Monday night by approving a number of community bank-favored provisions as part of a larger housing package. However, these riders could potentially jeopardize the bill’s chances of being passed again in the Senate.
The Bill’s Journey and Provisions
The bill, H.R. 6644, was passed in the House by a wide bipartisan margin. Championed by House Financial Services Committee Chairman French Hill, R-Ark., the package aims to increase housing supply by improving builders’ access to funding and reducing regulatory burdens. This approach is designed to boost building activity in both urban and rural communities.
Interestingly, the House’s version of the bill also includes several new provisions that enjoy strong support from the banking industry. Notably, one provision would allow banks with less than $6 billion in assets to qualify for a limited scope bank examination. Another provision seeks to simplify the process for new banks to establish themselves. Additionally, the bill proposes changes to brokered and custodial deposit rules and the least-cost resolution framework.
Bipartisan Support in the House
Both Democrats and Republicans in the House expressed their endorsement of not only the housing elements of the package, but also the community banking provisions. The broad bipartisan support among House Financial Services Committee members suggests that the bill is likely to be passed with a substantial bipartisan margin.
Rep. Maxine Waters, D-Calif., praised the legislation stating that it “includes a dozen bipartisan provisions to help small banks like Community Development Financial Institutions (CDFIs) and Minority Depository Institutions help to meet the housing and other needs of our constituencies.” She further added that the bill will promote a safe, sound, and competitive banking system, which won’t threaten the housing markets or the economy.
Rep. Mike Flood, R-Neb., coauthor of the bill, affirmed the presence of “meaningful community banking reforms in this legislation,” and highlighted that it eases burdens for de novo banks, tailors regulatory requirements for the smallest community banks, and reforms the bank resolution process.
Senate Disagreement
Despite the bipartisan support in the House, early disagreements have emerged in the Senate. Sen. Elizabeth Warren, D-Mass., criticized House Republicans for holding “housing relief hostage to push forward several bank deregulatory bills.” She argued that these bills could make community banks more fragile and harm consumers, small businesses, and economic growth.
If the chambers cannot agree, the legislation may fail, sending housing advocates back to the drawing board. Although the community banking provisions could proceed without Warren’s vote, her objections carry significant weight as the ranking member of the Senate Banking Committee and an early champion of the bill in the Senate.
Nevertheless, with the bill having already passed the Senate and the differences between the two versions being significant, a conference committee may be formed or amendments may be exchanged until both chambers are satisfied.
This development is a significant step in addressing housing affordability and community banking reform. The outcome will have profound implications for the American housing market and the wider economy.
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