Tester Announces Legislation to Spur Economic Growth, Increase Access to Capital, Protect Consumers

Senator Reaches Bipartisan Deal to Cut Red Tape for Main Street Montana

(U.S. Senate) – In what POLITICO is calling a “rare, bipartisan deal,” U.S. Senator Jon Tester announced he is introducing legislation to strengthen Main Street in rural America by increasing access to capital, cutting burdensome regulation, and protecting consumers.

Tester reached a bipartisan agreement with Senate Banking Committee Chairman Mike Crapo (R-Idaho) to introduce legislation that will cut red tape for community banks and credit unions while ensuring Montanans are safeguarded against risky Wall Street bets.

“This bill helps Montana families achieve the American dream of homeownership, protects consumers from fraud and financial risk, and cuts red tape for community lenders,” said Tester. “Montana’s Main Street banks did not cause the financial crisis and they shouldn’t be subject to the same regulations as Wall Street. We’ve seen rural communities dry up because entrepreneurs and first-time home buyers can’t access credit. And we’ve seen a one-size-fits all approach to our financial system that strangles economic growth. This legislation makes sure families and small businesses in states like Montana can thrive, while keeping the big banks on Wall Street in check.”

Tester’s bill addresses three main areas: access to mortgage credit and housing, consumer protection, and regulatory relief for community lenders.

Mortgage Credit and Housing
Tester’s legislation acknowledges that homeownership is a key to the American dream. His bill makes it easier for small financial institutions to lend to Montana families, while supporting low income families. This bill also ensures that key consumer protections stay in place. Specifically, Tester’s bill:

  • Exempts small financial institutions with fewer than 500 closed-end mortgage loans or lines of credit from certain reporting requirements
  • Provides that certain mortgages that are originated and retained in portfolio by a financial institution with less than $10 billion in total consolidated assets will be deemed “qualified mortgages”
  • Allows small financial institutions to opt out of certain escrow requirements in order to lower closing costs for consumers
  • Reduces paperwork requirements for rural housing authorities that support fewer than 550 households

Consumer Protection
Tester’s legislation increases protection for consumers who fall victim to fraud and tough financial times. Specifically his bill:

  • Provides one free year of fraud alerts for consumers impacted by the Wells Fargo scandal and the Equifax breach
  • Gives consumers one free credit freeze and unfreeze per year
  • Allows parents to turn on and off credit reporting for children under 18
  • Prevents credit bureaus from placing negative information on veterans’ credit scores for one year, due to mix-ups in Choice Program payments 
  • Prevents mortgage companies from immediately kicking tenants out of their rentals if the landlord is foreclosed upon
  • Encourages banks to report suspicious behavior if seniors could be getting financially scammed

Regulatory Relief
Tester’s legislation realizes that community banks, credit unions, and regional banks do not pose the same risk as Wall Street banks. His legislation tailors regulation appropriately. Specifically, his bill:

  • Allows banks with under $3 billion in total consolidated assets to use the Small Bank Company Policy Holding Statement, allowing them to operate with higher levels of debt 
  • Expands the number of banks eligible for an 18-month examination cycle; this will apply to banks with under $3 billion in total consolidated assets 
  • Cuts reporting requirements for depository institutions with less than $5 billion in total consolidated assets 
  • Exempts community banks with less than $10 billion in assets from global capital standards, known as Basel III, as long as the bank is highly capitalized 
  • Exempts banks with less than $10 billion in total assets from the Volcker rule, as long as the banks have less than five percent total trading assets and liabilities, saving community banks time and money from a rule meant for Wall Street banks 
  • Permits federal savings associations with less than $15 billion in total consolidated assets to operate with the same powers and duties as national banks without being required to convert their charters
  • Raises the threshold for systemically important financial institutions from $50 billion to $250 billion in total consolidated assets, allowing the Federal Reserve to tailor regulations for banks in between $100 billion and $250 billion. This provision also keeps in place important stress testing requirements

Tester’s bill is supported by the Montana Bankers Association, Montana’s Credit Unions, Montana Independent Bankers Association, and Montana Association of REALTORS.

“Senator Tester understands that certain regulatory barriers can impede consumer access to financial services,” said Tracie Kenyon, President and CEO of Montana’s Credit Unions. “Once again, he is reaching across the aisle to create common-sense solutions to improve processes and ensure that people’s financial needs are met. Montana’s not-for-profit credit unions are thankful for his vision and leadership.”

“Now the hard work begins to get this bill through Congress and signed by the President to address some of the important issues facing our communities and our customers due to unnecessary and burdensome regulations,” said Steve Turkiewicz, President and CEO of the Montana Bankers Association. “This is an important step for much needed bank regulatory reform. We thank Senator Tester and his staff for their many years of persistence in working with Montana’s hometown bankers, Senate Banking Committee Chairman Crapo (R- Idaho) and his Senate colleagues to a get this bill introduced.”

“Homeownership is one of the top driving factors in our economy today and makes for better communities and neighborhoods,” said John Herring, President of the Montana Association of REALTORS. “In Montana we value homeownership and what it brings to our towns and communities. This Legislation will strengthen Main Street in rural America by increasing access to capital, cutting burdensome regulation, and most importantly protecting Montana consumers. Senator Tester has been a champion for Montana and rural America on the Banking Committee and we applaud his bipartisan efforts in working with Republicans and Democrats to cut through the gridlock of Washington D.C. and write a bill that makes it easier to Montana banks and lenders to help families attain the dream of homeownership and for small businesses to continue to thrive though access to business capital.”

“On behalf of the membership of the Montana Independent Bankers Association, I express the Association’s strong support of the bipartisan Senate bill that is designed to provide much needed regulatory relief to Montana’s and this nation’s community banks,” said Tom Christnacht, President of the Montana Independent Bankers. “The membership of the MIB thanks Senator Jon Tester for his strong leadership in putting together a consensus regulatory relief package and for his efforts in getting 17 of his Senate colleagues to join him in advancing this much needed banking legislation. When members of MIB met with Senator Tester in his Washington D.C. office earlier this year, we expressed our belief that if there was ever a time to advance community bank relief provisions that would improve lending and strengthen economic growth at the local level, it was this year and this Congress. Senator Tester assured us that he was working hard to get a community banking bill through the Senate. Senator Tester delivered on that promise today. The MIB is pleased that the Senate Banking Committee, on which Senator Tester serves, will take up this bill before the end of the year. MIB looks forward to seeing this bipartisan legislation sent to the President for his signature so that Montana’s community banks get the regulatory relief they need in order to once again be able to focus primarily on serving their customers and their communities.”

Tester’s bill was also negotiated by Senators Heidi Heitkamp (D-N.D.), Jon Donnelly (D-Ind.) and Mark Warner (D-Va.).

Click HERE for a summary of the bill.