U.S. Senate Begins Debate on Tester’s Bipartisan Bill to Strengthen Rural America and Spur Economic Growth

Montanans Praise Senator’s Leadership, Support Bill to Cut Red Tape for Main Street Businesses

(U.S. Senate)—The U.S. Senate today began debating Senator Jon Tester’s bipartisan bill to strengthen rural America and spur economic growth in Montana.

Tester’s bill, the Economic Growth, Regulatory Relief, and Consumer Protection Act, increases access to capital by cutting red tape for community banks and credit unions, while protecting consumers against risky Wall Street bets. Tester took to the Senate floor today to underscore the urgent need to provide community banks and credit unions with regulatory relief to prevent further bank consolidation in Montana.

“Across rural America, bank consolidation is leaving communities underserved,” Tester said. “Community banks and credit unions didn’t cause the financial crisis, but they have suffered under the one-size-fits-all rules designed specifically to rein in risky behavior on Wall Street. As a result of complying with these regulations, many of our community bankers are hanging up their hats and our local banks are being swallowed whole by the big boys on Wall Street. When a community bank is bought out by a big bank, their business model changes and it is no longer tailored to fit the needs of the community.”

Since 2008, Montana has lost 23 chartered banks. Many of these banks have consolidated and closed down as a result of the costs related to complying with regulations that were targeted to reign in the behavior of the nation’s largest financial institutions.

Community banks and credit unions across Montana praised Tester for his leadership.

“The loss of small community banks is not good for our country, our consumers or our economy,” said Rex Phipps, CEO of Garfield County Bank in Jordan. “Senator Tester’s bill provides many remedies to lessen the regulatory burden on small banks which will allow us to remain competitive, viable and able to serve the needs of our communities.”

“As a small credit union, we spend a ridiculous amount of time complying with complex rules,” said Sydney Elvbakken, Manager of Homestead Federal Credit Union in Billings. “I am pleased to see a bill that would eliminate some of this red tape so I can focus my resources on serving members. I appreciate Senator Tester’s willingness to champion such legislation.”

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

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:

  • Expands the number of banks eligible for an 18-month examination cycle; this will apply to banks 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 complicated global capital standards, known as Basel III, as long as the bank is highly capitalized.
  • 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.
  • Allows banks with minimal trading activities and less than $10 billion to be exempt from the Volcker rule, saving community banks time and money from a rule meant for Wall Street banks.
  • Raises the threshold for systemically important financial institutions from $50 billion to $100 billion in total consolidated assets, requires stress tests for all banks above $100 billion and allows the Federal Reserve the ability to apply and tailor regulations for banks in between $100 billion and $250 billion. 

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

  • Provides consumers free credit freezes and unfreezes and allows them to set year-long fraud alerts.
  • Allows parents to turn on and off credit reporting for their minor children.
  • Prevents credit bureaus from placing negative information on veterans’ credit scores for one year, due to delays in Choice Program payments.
  • Provides free credit monitoring for all active-duty service members.
  • Prevents mortgage companies from kicking tenants out of their rentals immediately if the landlord is foreclosed upon.
  • Encourages banks to report suspicious behavior to help prevent seniors from getting scammed. 

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:

  • Allows financial institutions with less than $10 billion in total consolidated assets to offer “qualified mortgages” if held in portfolio with consumer protections, under certain circumstances, giving them the ability to offer more financing options.
  • 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.