On Monday, by a vote of 85-5, the Senate passed a housing bill – H.R. 6644 – that includes several provisions related to banking. Just a day later, the House approved the revised bill by a vote of 358-32, paving the way for it to go President Donald Trump to be signed into law. The 21st Century ROAD to Housing Act would reward communities that build more housing supply, ease environmental review of new construction, rethink regulations that hamper additional lending for small-dollar mortgages, and expand tenant assistance and protections. The legislation also includes in Title IX a series of provisions related to brokered deposits, bank examinations, de novo bank formation and a mentor-protégé program pairing large financial institutions with smaller depository institutions.

The legislation combines elements of separate housing bills introduced by the Senate Banking Committee and House Financial Services Committee.

• On the topic of community banks and brokered deposits, the bill provides that “custodial deposits” of an insured depository institution would not be considered brokered deposits if the total amount does not exceed 20% of an institution’s total liabilities and the institution has less than $10 billion in assets. The bill also would modify the amount of deposits that are not considered to be brokered deposits under a graduated scale based on an institution’s total liabilities. Specifically:
  • The sum of the following amounts of reciprocal deposits would not be considered to be funds obtained, directly or indirectly, by or through a deposit broker:
    • (A) An amount equal to 50 percent of the portion of the total liabilities of the agent institution that is less than or equal to $1,000,000,000.
    • (B) An amount equal to 40 percent of the portion, if any, of the total liabilities of the agent institution that is greater than $1,000,000,000, but less than or equal to $10,000,000,000.
    • (C) An amount equal to 30 percent of the portion, if any, of the total liabilities of the agent institution that is greater than $10,000,000,000, but less than or equal to $96,333,333,333.
• The consolidated asset threshold would be raised from $3 billion to $6 billion for insured depository institutions to qualify for an 18-month examination cycle.
• Banking regulators would be directed to streamline the de novo application process and study ways to improve the growth of rural depository institutions.
• The Treasury Department would be required to establish a mentor-protégé program pairing large financial institutions (with assets of $50 billion or greater) with small financial institutions (with assets of less than or equal to $2 billion, a minority depository institution, or a rural depository institution), with the goal of enhancing their capacity to serve customers and potentially act as financial agents.
• The federal banking agencies would be directed to create a new two-year phase-in pilot for de novo financial institutions to meet federal capital requirements.

Author: sdbrownlow

Student of Design