Tester’s Landmark Bipartisan Bill to Strengthen Rural America Clears Senate

Montana Small Business Leaders Applaud Senator’s Leadership, Praise Bill to Spur Economic Growth and Create Jobs

(U.S. Senate)—U.S. Senator Jon Tester’s landmark bipartisan bill to strengthen rural America cleared the Senate with overwhelming bipartisan support today.

Tester’s bill, the Economic Growth, Regulatory Relief, and Consumer Protection Act, overwhelmingly passed the Senate on a 67-31 vote. The bill will provides relief to small businesses, farmers, ranchers, and homebuyers by cutting red tape for community banks and credit unions, while protecting consumers against risky Wall Street bets.

“Montana’s community banks and credit unions didn’t cause the financial crisis, but they have paid the price for it,” Tester said. “It is time to cut the unnecessary red tape so families, small businesses, farmers and ranchers are able to grow their operation and create more jobs. This bill was years in the making and folks put aside politics to do what is best to empower rural America and protect our way of life.”

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

Montana business leaders and community bankers applauded Tester’s efforts:

“We support Senator Tester’s efforts to cut red tape for Main Street Montana,” said Carla and Darin Fisher of Backslope Brewing in Columbia Falls. “As small business owners that rely on our local banks we fully support legislation that recognizes the differences between our local banks and Wall Street. We want a system where our local bankers know who we are and invest in us because they care about the community not just because the numbers look good. We need strong local banks in order to grow businesses in our community and this bill is a great start.”

“Senator Tester’s bill will provide credit union members the opportunity to choose a credit union as their lender of choice when purchasing multi-family properties,” said Steve King, President of Montana Federal Credit Union in Great Falls. “I’m pleased that Senator Tester recognizes that credit union members should have the power to choose,”

“Life happens to people and sometimes people need a solution very quickly,” said Don Bennett, President of Freedom Bank in Columbia Falls. “Some of the Dodd Frank regulations, especially those applying to home loans, severely limit our bank’s ability to help people work through their looming issues. We truly care about our customers and our community. We strive to do what is best for our customers and our community. Senator Tester’s bill is a great start to allowing community banks to do what community banks are designed to do, help our customers, grow businesses and invest in our communities.”

“We are particularly happy to see provisions in Senator Tester’s bill that combat financial fraud of elders,” said Tom Boos, President of Billings Federal Credit Union. “Credit unions in the Billings area have long supported prevention of elder abuse through staff awareness and community fundraising efforts, and I urge Congress to pass this important legislation. My personal thanks to Senator Tester for committing to consumer protections and regulatory relief at the same time – not an easy feat!”

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 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.

A summary of Tester’s bill is available HERE.