Wednesday, April 17, 2024

Kennedy, Smith introduce bill to make it easier for community banks and credit unions to provide public with more banking, credit options

by BIZ Magazine

WASHINGTON – Sen. John Kennedy (R-La.), a member of the Senate Banking Committee, today introduced the Promoting New and Diverse Depositories Act, which would direct the prudential regulators to conduct a study on the barriers that depository institutions face when attempting to enter the banking market. The bill would also require a strategic plan to promote more new applicants for bank charters, especially minority depository institutions and Community Development Financial Institutions.

Sen. Tina Smith (D-Minn.) is the lead co-sponsor of the bill.

“Small banks and credit unions often provide loans to small businesses and other job creators, especially in rural areas that large banks often forget about. I introduced this bill to make it easier for community lenders to give Americans more options for accessing credit and making the most of their hard-earned money,” said Kennedy.

Federal regulators include the Federal Reserve Board, Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration and the Consumer Financial Protection Bureau. 

Community banks and credit unions play key roles in America’s financial markets and support huge swaths of the U.S. economy. They are also a major supplier of credit to agricultural producers and businesses, including during times of economic stress when the need for credit is most acute.

In 2023, however, there are 4,161 fewer banks in the United States (4,672 total) than there were in 2005 (8,833). That represents a nearly 50 percent decline. Of the banks active today, only 70 have been established since 2010.

In 2001, there were 164 minority depository institutions (MDIs). The number of MDIs reached its peak at 215 in 2008 and declined to 147 in 2022. 

Rep. Jake Auchincloss (D-Mass.) introduced the bill in the House of Representatives, which has already passed the legislation.

Text of the Promoting New and Diverse Depositories Act is available here

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