H.R. 6955 — Main Street Act

This section directs the Federal banking agencies to issue rules providing a 3-year phase-in of Federal capital requirements for new insured depository institutions or their holding companies, beginning on the date of insurance. This section allows such new institutions, during their first 3 years, to request material deviations from agency-approved business plans, requires agency action (approve, conditionally approve, deny with reasons and suggested changes) within 30 days of receipt, and deems requests approved if no action is taken. This section sets the Community Bank Leverage Ratio (i.e., an optional alternative capital framework for qualifying institutions with assets under $10 billion) for new rural depository institutions (i.e., those with assets under $10 billion located in rural areas, defined using OMB and Census criteria) during their first 3 years at the lesser of the ratio adopted under EGRRCPA section 201 or 7.5 percent, with rules to phase in lower percentages during the first 2 years. This section amends the Home Owners’ Loan Act (12 U.S.C. 1464(c)) to authorize Federal savings associations to make agricultural loans as qualified thrift investments (i.e., unlimited-purpose loans for housing finance) and removes agricultural loans from the category of other investments subject to paragraph (2)(A) limits (previously "business, or agricultural"; now "or business"). This section requires the Federal banking agencies to jointly study causes of low de novo insured depository institution formations over the prior 10 years and ways to increase them in underserved areas, with a report to the House Financial Services and Senate Banking Committees within 1 year of enactment.

This section requires the Comptroller of the Currency to publish an annual report on national bank and Federal savings association charter applications, including numbers received and by disposition (e.g., approved preliminarily or finally, denied, withdrawn), mean and median times for preliminary and final approvals, and common reasons for denial, withdrawal, or expiration of preliminary approval. The section further requires (1) the National Credit Union Administration to publish an annual report on Federal credit union charter applications, including numbers by disposition (e.g., approved finally, denied, withdrawn), mean and median final approval times, and common reasons for denial, withdrawal, inactivity, or return pending resubmission; (2) the Board of Governors of the Federal Reserve System to publish an annual report on top-tier depository institution holding company applications (i.e., those not controlled by another such holding company), including numbers by disposition, mean and median approval times, and common reasons for denial or withdrawal; (3) the Federal Deposit Insurance Corporation to publish an annual report on deposit insurance applications, including numbers by disposition, mean and median approval times, and common reasons for denial or withdrawal; and (4) the Federal Reserve, Federal Deposit Insurance Corporation, and National Credit Union Administration, jointly and in consultation with state regulators, to publish an annual report on state depository institution and state credit union charter applications (covering all states, the District of Columbia, and territories), including numbers by disposition, mean and median approval times by state, and common reasons for denial or withdrawal.

This section directs the federal banking agencies—Board of Governors of the Federal Reserve System, Comptroller of the Currency, and Federal Deposit Insurance Corporation—to jointly conduct a study identifying methods to improve growth, capital adequacy, and profitability of U.S. depository institutions primarily serving rural areas, as well as federal statutes (other than appropriations acts) or agency regulations limiting those methods or de novo establishments in rural areas; and to issue a report with all findings to the House Committee on Financial Services and Senate Committee on Banking, Housing, and Urban Affairs within one year of enactment. This section separately directs the National Credit Union Administration to conduct a similar study for insured credit unions primarily serving rural areas and to issue a report with all findings to the same committees within one year of enactment. In this section, rural area means (1) a county neither in a metropolitan statistical area nor in an adjacent micropolitan statistical area, per Office of Management and Budget definitions and Department of Agriculture Urban Influence Codes; or (2) a census block not in an urban area per the latest decennial census.

This section increases to 20 (from 15) each specified percentage limit in the fifth sentence of the Eleventh paragraph governing national bank investment powers (12 U.S.C. 24) and makes a parallel change in the investment powers of state member banks (12 U.S.C. 338a). (Thus, expanding permissible community investments by both types of banks.)

This section establishes a requirement for the Secretary of the Treasury (or designee) to annually testify, at the discretion of the Chair of the House Committee on Financial Services and the Chair of the Senate Committee on Banking, Housing, and Urban Affairs, before those committees (or subcommittees) regarding the operations of the Community Development Financial Institutions Fund (CDFI Fund)—a wholly owned government corporation that provides financial and technical assistance to community development financial institutions serving low-income and underserved communities—during the previous year.

This section states the sense of Congress that the CDFI Bond Guarantee Program provides community development financial institutions (CDFIs) with long-term capital to promote economic opportunity in underserved and distressed communities; amends the program statute (12 U.S.C. 4713a) as follows: (1) makes technical changes to the calculation of guarantee fees in subsection (c)(2) by striking language multiplying by the outstanding principal balance of issued notes or bonds and inserting "outstanding" before "principal amount"; (2) revises the limitation on guarantee amounts in subsection (e)(2) to prohibit guarantees below $25 million while capping total guarantees at $1 billion per fiscal year; (3) increases the guarantee fee in subsection (g)(1) to not fewer than 10 basis points and not more than 15 basis points (from 10 basis points); and (4) extends program authority through December 31, 2028 (from September 30, 2014); makes a clerical amendment to the table of contents; and directs the Secretary of the Treasury to report to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services on the program's effectiveness within three years of enactment. (As background, the CDFI Fund—established under 12 U.S.C. 4703—supports CDFIs that provide financing to low-income and underserved communities; the Bond Guarantee Program authorizes Treasury guarantees for CDFI-issued bonds to fund eligible community and economic development activities.)

This section requires Federal financial institutions regulatory agencies (i.e., OCC, Federal Reserve, FDIC, NCUA, and CFPB) to tailor any regulatory action after enactment—considering institutions' risk profiles and business models to limit regulatory burdens accordingly—and to evaluate specified factors such as aggregate regulatory effects on serving customers and statutory intent; disclose tailoring in notices of proposed and final rulemaking; submit annual reports to the Senate Banking Committee and House Financial Services Committee on tailoring actions; and directs GAO to report within 18 months of enactment on the section's effects. This section further directs the appropriate Federal banking agencies to promulgate regulations for short-form call reports (i.e., reduced reporting requirements) for the first and third quarterly reports of condition for all banks eligible for the Community Bank Leverage Ratio. This section also requires those agencies, in consultation with state bank supervisors, to submit to the specified congressional committees within 18 months of enactment a report on modernizing bank supervision that addresses changing business models, examiner workforce and training, supervisory structure, communication, technology, community bank factors, and needed statutory changes.

This section directs the Federal Reserve, not later than 180 days after enactment, to revise the Small Bank Holding Company and Savings and Loan Holding Company Policy Statement to raise the consolidated asset threshold for regulatory relief to $6 billion (from $3 billion). (As background, the policy statement exempts qualifying small holding companies from consolidated capital requirements, simplifies reporting, and permits dividends from earnings without prior approval.)

This section amends the Community Bank Leverage Ratio (CBLR) framework, established under section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (i.e., a simplified alternative to risk-based capital requirements for qualifying community banks), by (1) increasing the asset threshold for qualifying community banks to $15 billion (from $10 billion), and (2) revising the CBLR range to not less than 6% and not more than 9% (from not less than 8% and not more than 10%). It further directs the Board of Governors of the Federal Reserve System, Comptroller of the Currency, and Federal Deposit Insurance Corporation to (1) review the CBLR framework to encourage more opt-ins—particularly by smaller qualifying community banks—and reduce compliance burdens; (2) issue a report to the House Committee on Financial Services and Senate Committee on Banking, Housing, and Urban Affairs within 150 days containing findings and recommendations on CBLR calculations, asset treatments, qualifying criteria, opt-in procedures, grace periods, and potential statutory changes; and (3) propose implementing rules within 180 days and finalize them within one year of enactment, incorporating the statutory amendments and report recommendations.

This section increases asset thresholds applicable to bank holding companies, savings and loan holding companies, and other financial companies for Federal Reserve assessments (under Federal Reserve Act §11(t)), financial holding company activities (under Bank Holding Company Act §4(k)), and enhanced prudential standards and other requirements (under Financial Stability Act of 2010 §§116, 121, 163, 164, and 165, and Economic Growth, Regulatory Relief, and Consumer Protection Act §401(f)) as follows: (1) $250 billion to $370 billion in multiple Financial Stability Act provisions (i.e., §§116(a), 121(a), 163(b), 164, 165(a)(1), 165(i)(2)(A), and 165(j)(1)) and Economic Growth Act §401(f); (2) $100 billion to $150 billion in Federal Reserve Act §11(t)(2) (each place it appears) and Financial Stability Act §165(a)(2)(C), and the range "$100 billion to $250 billion" to "$150 billion to $370 billion" in Federal Reserve Act §11(t)(3); (3) $50 billion to $75 billion in Financial Stability Act §165(h)(2) (each place it appears); and (4) $10 billion to $15 billion in Bank Holding Company Act §4(k)(6)(B)(ii) and Financial Stability Act §163(b). (Thus, fewer institutions meet thresholds triggering stricter supervision, stress testing, and liquidity requirements.) This section further requires the Federal Reserve, by April 1, 2031, and every five years thereafter, to adjust the revised statutory thresholds (and certain others) by the ratio of current-dollar U.S. GDP for the prior calendar year to that preceding April 1, 2026 (if greater than 1), with rounding up to the nearest $50 billion (for amounts ≥$100 billion) or $5 billion (for lesser amounts), publication in the Federal Register by April 5, and effectiveness January 1 of the following year. It also directs the Federal Reserve, OCC, and FDIC, by June 30, 2026, and every five years thereafter, to review regulations implementing Financial Stability Act §165 (enhanced prudential standards) or cross-referencing such regulations—including any non-statutory asset or quantitative thresholds—and modify them using a comparable GDP-based adjustment ratio.

This section increases asset thresholds used for regulatory tailoring—exempting smaller community banks and credit unions from certain enhanced prudential standards, reporting, interlocks restrictions, and other requirements (while applying them to larger institutions)—across 14 banking statutes to reflect historical U.S. GDP growth, with adjustments generally 2-5 times prior levels (e.g., to $3 billion (from $1 billion) for community financial institutions eligible for Federal Home Loan Bank System membership and benefits under the Federal Home Loan Bank Act (12 U.S.C. 1422(10)); to $15 billion (from $10 billion) for bank holding companies and others under the Bank Holding Company Act of 1956, Dodd-Frank Act, and Truth in Lending Act; to $800 million (from $250 million) under the Community Reinvestment Act of 1977; to $170 million (from $50 million) for credit unions under the Federal Credit Union Act; to $21 billion (from $5 billion) under the Federal Deposit Insurance Act). (Thus, more institutions qualify for regulatory relief.) This section further requires the Federal Reserve Board, by April 1, 2031, and every five years thereafter, to adjust those thresholds based on changes in current-dollar U.S. GDP.

This section revises the minimum board of directors meeting requirements for Federal credit unions from at least monthly to tiered frequencies based on the credit union's status and supervisory ratings under the Uniform Financial Institutions Rating System (UFIRS; i.e., CAMELS ratings from 1, best, to 5, worst, including a capability of management component). It requires (1) de novo Federal credit unions to meet not less frequently than monthly during their first five years; (2) credit unions with a composite UFIRS rating of 1 or 2 and management capability rating of 1 or 2 to meet not less than six times annually, with at least one meeting per fiscal quarter; and (3) credit unions with a composite rating of 3, 4, or 5 or management capability rating of 3, 4, or 5 to meet not less frequently than monthly. (Thus, well-rated credit unions may meet less often than under current law.)

This section states congressional findings regarding the subjectivity of CAMELS ratings (i.e., evaluations of financial institutions' capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk) and their role in regulatory decisions such as mergers and deposit insurance premiums. It amends the Federal Financial Institutions Examination Council Act of 1978 by adding a new section requiring the Council to recommend changes to the Uniform Financial Institutions Rating System, including (1) articulable, clear, and reviewable criteria for each CAMELS component; (2) revised factors for composite ratings that better reflect material financial condition and risk; (3) elimination of the management component or its revision to focus on governance and controls; (4) consideration of compliance with recordkeeping requirements (e.g., 12 U.S.C. 1829b), the Bank Secrecy Act, anti-money laundering laws, and related regulations; and (5) a transparent methodology limited to objective criteria. It further directs federal financial regulators to jointly issue implementing rules within 12 months of the Council's recommendations, after publishing a notice of proposed rulemaking with at least a 90-day public comment period, without limiting existing supervisory or enforcement authorities. This section also revises the "well managed" definition under the Bank Holding Company Act of 1956 to specify achievement of a CAMEL rating.

This section amends the Federal Financial Institutions Examination Council Act of 1978 to establish timelines and procedures for Federal financial institutions regulatory agencies' examinations of financial institutions not subject to continuous or resident examination programs, including (1) completing examinations within 270 days of commencement (extendable with written notice specifying reasons); (2) providing final examination reports within 90 days after the later of the exit interview or receipt of additional institution-provided information; (3) conducting exit interviews within 30 days of examination completion (extendable with written notice specifying reasons); and (4) upon request, including an appendix in the final report listing all examination or factual information supporting material supervisory determinations. The section further requires such agencies to establish procedures enabling covered financial institutions to obtain written prudential advice (i.e., non-objection to activities, interpretations of law/regulation/accounting principles/supervisory guidance) on covered actions (e.g., transactions, product issuance, corporate structure changes, or agency objections thereto), with agencies required to acknowledge complete requests within 30 days and provide written responses within 60 days of receipt (or 30 days after receiving supplemental information).

This section establishes examination relief for well-managed and well-capitalized insured credit unions with $6 billion or less in consolidated assets (i.e., alternating limited-scope examinations after a full-scope, on-site examination by the National Credit Union Administration (NCUA); and combined safety and soundness, consumer compliance, information technology, and cybersecurity examinations upon request of the credit union). It excludes such credit unions subject to a formal NCUA enforcement proceeding or order; directs NCUA to issue implementing rules within 12 months that establish limited-scope examination procedures, review procedures for institutions with material financial or operational changes or noncompliance, and balance burden reduction with safety, soundness, and compliance oversight; and clarifies that it does not limit NCUA authority for off-site monitoring, targeted reviews, or additional full-scope examinations. (As background, NCUA conducts examinations of insured credit unions to determine financial condition for share insurance purposes and compliance with applicable laws.)

This section increases to $6 billion (from $3 billion) the asset threshold applicable to certain FDIC limitations on supervisory examinations under paragraphs (4)(A) and (10) of section 10(d) of the Federal Deposit Insurance Act.

This section directs each federal banking agency—including the National Credit Union Administration (NCUA) and Bureau of Consumer Financial Protection (CFPB)—to remove all references to reputational risk (i.e., potential negative publicity adversely impacting a depository institution, excluding unlawful transactions involving state sponsors of terrorism or foreign terrorist organizations) from agency guidance, rules, examination manuals, and similar documents used in supervising depository institutions (including insured credit unions). It prohibits such agencies from (1) issuing rules, regulations, or supervisory expectations on reputational risk; (2) conducting examinations or supervisory exercises on it; (3) issuing findings or communications on it; (4) basing supervisory ratings on it; or (5) taking enforcement actions based on it. Agencies must submit implementation reports to the congressional banking committees not later than 180 days after enactment.

This section revises the composition and terms of service for the Board of Directors of the Federal Deposit Insurance Corporation (FDIC)—which manages the agency responsible for insuring deposits in banks and thrifts—by (1) changing all references to "Consumer Financial Protection Bureau" to "Bureau of Consumer Financial Protection"; (2) requiring that, among the three presidentially appointed directors (who must be U.S. citizens), one have state bank supervisory experience and, separately, one have demonstrated primary experience working in or supervising depository institutions with less than $17 billion in total assets; (3) limiting each appointed member to no more than two terms (from unlimited, with each term being six years); and (4) capping total service by any board member at 12 years (new provision).

This section requires the head of each specified financial agency (i.e., Bureau of Consumer Financial Protection, Department of Housing and Urban Development, Department of the Treasury, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, Board of Governors of the Federal Reserve System, National Credit Union Administration, Office of the Comptroller of the Currency, and Securities and Exchange Commission) to include a specified "guidance clarity statement" prominently on the first page of any guidance issued on or after enactment. The statement declares that the guidance lacks the force and effect of law, establishes no rights or obligations, is non-binding on the agency or public, and that noncompliance does not conclusively establish a legal violation. (Guidance is defined as a statement of general applicability intended to affect regulated parties' future behavior by setting policy or interpreting statutes or regulations, excluding rules subject to notice-and-comment rulemaking or exempt under 5 U.S.C. §553, procedural rules, adjudications, or internal agency documents.)

This section revises the periodic regulatory review process under Section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (12 U.S.C. 3311)—which requires the Financial Institutions Examination Council (FIEC) and federal banking agencies to identify outdated or unduly burdensome regulations—by (1) replacing references to "appropriate Federal banking agency" or agencies with "Federal financial institutions regulatory agency" or agencies (defined in new subsection (f) per 12 U.S.C. 3302 to mean the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, and National Credit Union Administration); (2) shortening the review cycle to once every 8 years (from 10 years); (3) requiring each such agency to conduct an internal review of the cumulative impact of its regulations—including effects on consumer access to financial products and services, credit availability and market liquidity, balance of benefits and costs to financial system safety and economic activity, and quantified economic costs—with recommendations to streamline duplicative, outdated, or burdensome rules; and (4) directing the FIEC report to Congress to include agency summaries of these internal reviews and to address regulatory burdens identified through public comments and internal reviews.

This section amends the annual reporting requirements of the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation to include descriptions of their interactions with global financial regulatory or supervisory forums (i.e., Bank for International Settlements, Basel Committee on Banking Supervision, Financial Stability Board, International Association of Insurance Supervisors, Network of Central Banks and Supervisors for Greening the Financial System; excluding international financial institutions and treaty-based organizations in which the agencies participate). The descriptions must cover— (1) financial regulatory or supervisory standard-setting issues discussed; (2) rationale, objectives, and potential effects of rules proposed or adopted, guidance, or similar actions discussed, including an economic impact analysis of whether expected costs are offset by expected benefits for economic, national security, financial stability, or other national interests; (3) positions taken by agency representatives; and (4) efforts to increase transparency at the forums. This section also redesignates a provision on data standards in the Revised Statutes as section 332 (previously one of two sections 333) and updates the table of contents accordingly.

This section directs the Board of Governors of the Federal Reserve System to commence, within 60 days of enactment, a review of discount window operations (i.e., Federal Reserve lending to depository institutions for short-term liquidity, including in financial stress) and complete it within 240 days. The review must assess the discount window's effectiveness; technology, cybersecurity, and communications; oversight and access consistency; interactions with other liquidity providers such as Federal Home Loan Banks; operating hours relative to payment systems like Fedwire and FedNow; impacts of mobile banking on liquidity risk; and stigma reduction measures to improve access, efficiency, transparency, and terms. Following the review, the Board must develop, in consultation with Federal Reserve Banks, a remediation plan identifying deficiencies and enhancements, including specific actions, timelines, milestones, and interim controls. Not later than 365 days after enactment, the Board must submit to the House Financial Services Committee and Senate Banking Committee a report on the review findings and remediation plan—after consulting the Comptroller of the Currency, Federal Deposit Insurance Corporation, and Treasury Secretary—and the Board Chairman must testify on it at the next semi-annual hearing under section 2B of the Federal Reserve Act. The Board and the Inspector General of the Board and Consumer Financial Protection Bureau must submit annual reports to the committees on discount window effectiveness, remediation progress, and plan implementation. Reports may include confidential annexes for sensitive information on monetary policy, financial stability, cybersecurity, or institution safety. The provision sunsets upon the Board's notification to Congress and public website publication that the remediation plan is fully implemented.

This section revises the exception under the Federal Deposit Insurance Act (12 U.S.C. 1831f(i)) for reciprocal deposits (i.e., deposits placed through agent institutions in nationwide networks such as ICS or CDARS, which enable banks to offer fully FDIC-insured accounts exceeding $250,000 while retaining funds locally) from treatment as brokered deposits subject to restrictions on undercapitalized institutions. (1) Replaces the prior cap in paragraph (1) with tiered amounts not considered brokered: 50% of an agent institution's total liabilities up to $1 billion, 40% of liabilities greater than $1 billion but less than or equal to $10 billion, and 30% of liabilities greater than $10 billion but less than or equal to $250 billion. (Thus, larger agent institutions may exclude greater absolute amounts of reciprocal deposits from brokered treatment.) (2) Modifies the definition of agent institution in paragraph (2)(A) to include institutions with a most recent CAMELS rating of 1, 2, or 3 (previously limited to 1 or 2), adds institutions not yet examined whose deposits first became FDIC-insured in the current or immediately preceding calendar year, and adds paragraph (3) authorizing the FDIC to waive loss of agent status on a case-by-case basis if needed for safety and soundness. (3) Directs the FDIC, in consultation with the Federal Reserve, to study reciprocal deposits—including their performance since 2018 (by institution size, during stress, and end-user demand from municipalities, businesses, and nonprofits), comparisons to other deposits, and benefits and risks—and to submit a report with findings to the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs within six months of enactment.

This section establishes a limited exception to the prohibition on insured depository institutions that are not well capitalized from accepting brokered deposits by excluding "custodial deposits" (i.e., deposits placed by custodians, trustees, or plan administrators in a fiduciary capacity to provide FDIC insurance for third parties, excluding those placed in return for bank-paid fees) at eligible institutions, to the extent such deposits do not exceed 20% of the institution's total liabilities. Eligible institutions are those with less than $10 billion in total assets that (1) received a composite supervisory rating of 1, 2, or 3 and are well capitalized upon most recent examination; (2) had deposits first become FDIC-insured in the current or prior calendar year; or (3) received a waiver under existing law; with FDIC waiver authority if an institution loses eligibility. (As background, the brokered deposit rule prevents undercapitalized institutions from accepting potentially volatile, high-cost deposits via brokers.) It further prohibits eligible institutions from paying interest on custodial deposits accepted while not well capitalized at rates that significantly exceed (1) local market rates for similar-maturity deposits accepted in the institution's normal market area or (2) FDIC-established national rates for deposits accepted outside that area.

This section amends the Federal Deposit Insurance Act to exempt proposed insured depository institution mergers resulting in less than $10 billion in assets from agency consideration of competitive effects (i.e., monopoly risk or substantial lessening of competition), including by adding such mergers to the list of transactions not requiring post-approval notice. It further requires the FDIC to annually adjust the $10 billion threshold for covered years (i.e., years of nominal U.S. GDP increase) by the percentage increase from the highest nominal GDP in the preceding five years to the covered year's nominal GDP, as determined by the Bureau of Economic Analysis. This section similarly amends the Bank Holding Company Act to exempt proposed bank holding company acquisitions, mergers, or consolidations resulting in less than $10 billion in assets from Federal Reserve consideration of such competitive effects, with an identical annual GDP-based threshold adjustment by the Board. This section similarly amends the Home Owners' Loan Act to exempt proposed savings and loan holding company transactions resulting in less than $10 billion in assets from Federal Reserve consideration of such competitive effects, with an identical annual GDP-based threshold adjustment by the Board.

This section directs the Comptroller General of the United States to conduct a study on federal depository institution regulatory agencies' (i.e., Federal Reserve, OCC, FDIC, and NCUA) use of commitments, conditions, and other merger review procedures for insured depository institution merger applications under specified statutes (e.g., Home Owners' Loan Act §10(e) (12 U.S.C. 1467a(e))). The study must (1) evaluate quantifiable metrics; (2) assess alignment of commitments and conditions with statutory requirements and any extrastatutory influences; (3) consider benefits and risks of compliant merger review approaches; and (4) evaluate impacts on safety and soundness, financial stability, competition, and availability of financial products and services offered by insured depository institutions. This section further requires the Comptroller General to submit a report with all findings to the House Financial Services Committee and Senate Banking, Housing, and Urban Affairs Committee not later than one year after enactment.

This section requires the Inspector General of each federal depository institution regulatory agency—i.e., the Board of Governors of the Federal Reserve System, Comptroller of the Currency, Federal Deposit Insurance Corporation, and National Credit Union Administration—to review the agency's procedures for reviewing insured depository institution merger applications not later than one year after enactment and every three years thereafter. The review must (1) evaluate quantifiable metrics such as mean and median processing times; (2) identify sources of delay; (3) assess benefits and risks of alternative review approaches; (4) evaluate impacts on safety and soundness, financial stability, competition, and availability of financial products and services; and (5) provide recommendations to improve timeliness and efficiency consistent with statutory responsibilities. Each Inspector General must issue a report with findings to the House Committee on Financial Services and Senate Committee on Banking, Housing, and Urban Affairs and publish it online, and the relevant agency must submit and publish a written response with an implementation plan to the extent appropriate.

This section revises Federal Reserve Board review timelines for bank holding company formation and acquisition applications under the Bank Holding Company Act of 1956 by replacing the prior 91-day deemed approval period (from submission of a complete record) with a new process requiring a completeness determination notice within 30 days (extendable by 30 days for complex applications), deeming the record complete upon applicant response unless material deficiencies are identified within 30 days, excluding third-party information from completeness determinations, and mandating a decision within 120 days of initial submission (deemed approved if not acted upon, extendable by 30 days at applicant request); applies parallel requirements to savings and loan holding company applications under the Home Owners' Loan Act by striking the prior 90-day decision requirement (from complete record submission) and adding the same 30-/120-day timelines and procedures; and establishes identical timelines and procedures for responsible agency review of insured depository institution merger applications under the Federal Deposit Insurance Act. (Thus, these changes standardize and generally accelerate approvals, potentially facilitating faster interventions such as acquisitions of failing institutions.)

This section establishes a least-cost resolution exception to the Federal Deposit Insurance Act's requirement that FDIC assistance to prevent the default of an insured depository institution (i.e., loans, deposits, asset purchases, liability assumptions, or contributions) be the method least costly to the Deposit Insurance Fund (DIF). (As background, the least-cost mandate protects the DIF—funded by bank insurance premiums—from unnecessary losses.) The exception permits the FDIC, at its discretion and with concurrence from the Federal Reserve Board (after Treasury consultation), to select a costlier alternative if its potential additional DIF risks are outweighed by benefits in limiting further U.S. banking system concentration in global systemically important banking organizations (G-SIBs, i.e., global systemically important bank holding companies and affiliates); such alternatives must (1) be the least costly among options not involving a G-SIB transaction and not exceeding liquidation costs, (2) have a cost difference from the covered (G-SIB-involved) least-cost alternative not exceeding a maximum DIF net worth threshold to be set case-by-case via FDIC rule within one year of enactment, and (3) if involving asset purchases or deposit assumptions by another party, include that party's DIF assessment paid over at least five years (amount determined case-by-case via FDIC rule within one year, factoring a realistic discount rate, the cost difference, and other criteria). The FDIC must report to the House Financial Services and Senate Banking Committees within 30 days of invoking the exception, analyzing the economic cost difference from the least-cost alternative (determined per existing statutory methods); existing rules of construction do not apply to these amendments.

This section directs the Comptroller of the Currency, Federal Deposit Insurance Corporation, and Board of Governors of the Federal Reserve System to jointly conduct a study on the use of shelf charters (i.e., pre-approved national bank charters per OCC guidance) and modified bidder qualification processes (i.e., FDIC process allowing non-chartered entities to bid on failed banks per 2008 press release) in bank resolutions—including their application under the Bank Holding Company Act and Home Owners' Loan Act section 10 (12 U.S.C. 1467a), use in 2023 receiverships, potential to expand bidder pools and protect the Deposit Insurance Fund, impacts since January 1, 2008, and private equity ownership risks—and to submit a report with findings and legislative/regulatory recommendations to the House Financial Services Committee and Senate Banking, Housing, and Urban Affairs Committee within one year of enactment.

This section revises exceptions to concentration limits (i.e., prohibitions on mergers resulting in control of more than 30% of deposits in a banking market) under the Federal Deposit Insurance Act (FDI Act) and Bank Holding Company Act of 1956 (BHC Act) for interstate merger transactions and acquisitions involving insured depository institutions or banks in default or danger of default. Specifically, the bill amends (1) FDI Act §18(c)(13) to condition such exceptions on the responsible agency determining, based on clear and convincing evidence, that the transaction is necessary to prevent significant economic disruption or adverse effects on financial stability, and the FDIC receiving no qualified bid (i.e., from a well capitalized and well managed company that would result in a well capitalized institution post-merger) from a non-prohibited acquirer; (2) FDI Act §44(e) to apply parallel conditions, including cross-references to the new qualified bid definition; and (3) BHC Act §3(d)(5) to apply parallel conditions for Board approvals of acquisitions by bank holding companies. (Thus, these changes limit large banks' ability to acquire failing institutions absent competitive bids from healthier acquirers.)

This section enhances transparency requirements for systemic risk determinations under section 13(c)(4)(G)(i) of the Federal Deposit Insurance Act (i.e., FDIC Board determinations, with Treasury Secretary and Federal Reserve concurrence, authorizing open-bank assistance or other actions to mitigate systemic risk from an insured depository institution failure). (1) It revises the Government Accountability Office (GAO) review mandate in section 13(c)(4)(G)(iv), requiring GAO to report to Congress within 60 days of such a determination (and again 180 days thereafter) on the determination's basis and purpose; effects on insured depository institutions and uninsured depositors; executive/board mismanagement and compensation practices; supervisory/regulatory shortcomings; regulator actions; and contributors such as auditing, credit ratings, or Federal Reserve/Federal Home Loan Bank liquidity. (2) It adds a new section 13(c)(12) requiring the appropriate Federal banking agency to report to Congress within 90 days of the determination (and again 210 days thereafter, with possible 60-day extensions for financial stability priorities), disclosing (subject to redactions for personally identifiable information) prior 3-year examination/inspection reports and material supervisory communications; executive/board mismanagement; agency shortcomings and contributing dynamics; and recommendations for safety/soundness—while protecting privileges and Freedom of Information Act exemptions, maximizing public publication (with congressional consultation for omissions), and allowing consolidated reports.

This section establishes a minimum 15-year holding period for merchant banking investments (i.e., temporary equity investments in nonfinancial companies for resale) by financial holding companies under Federal Reserve Board regulations authorized by the Bank Holding Company Act of 1956. For any such investment held on the date of enactment of the Merchant Banking Modernization Act, the permitted holding period is not less than 15 years from the initial date of investment.

This section directs (1) the Board of Governors of the Federal Reserve System, Comptroller of the Currency, and FDIC to study the impacts of partnerships between banking organizations (i.e., insured depository institutions or depository institution holding companies, as defined in 12 U.S.C. 1813) and financial technology companies—including effects on the banking sector, competition, innovation, consumer protection, financial services availability, formation of new banking organizations, time to market, compliance burdens, customer acquisition, technological capabilities, and funding sources—and to recommend changes to federal banking laws or agency rules to promote such partnerships, with a report to the House Financial Services Committee and Senate Banking, Housing, and Urban Affairs Committee due within one year of enactment; and (2) the NCUA to conduct a parallel study and report on credit union-fintech partnerships.