WASHINGTON–The House Financial Services Committee passed the Community Bank LIFT Act (H.R.5276), a bill that seeks to “reduce burdensome regulations on community banks and empower them to reinvest in Main Street,” according to its chief sponsor, Rep. Young Kim (R-CA).
Specifically, the bill would expand the asset threshold for qualifying community banks from $10 billion to $15 billion, lower the Community Bank Leverage Ratio range from 8%-10% to 6%–8%, and require federal regulators to review and update the framework to simplify compliance and support new community bank formation.
‘Slow Demise’
“In California, we have been experiencing the slow demise of our community banks,” said Kim in a statement. “Unfortunately, we are not seeing any new community banks either to replace them. In Southern California, only four new banks have formed since 2021. In Orange County, there has only been one bank formed since 2021. When you start a small business and are looking for financing, you often go to your credit union or community bank first because you want a trusted partner that understands the local community.
When we lose community financial institutions and do not see new ones form, we are losing the lifeblood of Main Street America.
“Part of the reason that we have not seen new community bank formation in Southern California is because of the complex regulatory climate that they face once these banks are up and running,” Kim continued.
