HR-4478-119
Motion to reconsider laid on the table Agreed to without objection.
Sponsored by Tim Moore (R-NC)
What it does
This bill would raise the maximum asset size that qualifies a well-capitalized, well-managed insured depository institution (such as a bank or credit union) for less frequent federal examinations — from less than $3 billion to less than $6 billion in assets. Institutions that qualify would be examined on an 18-month cycle rather than the standard 12-month cycle. Eligibility still requires the institution to have received a satisfactory rating on its most recent examination.
Who benefits
Small and mid-sized banks and credit unions with assets between $3 billion and $6 billion that are well-capitalized and well-managed — they would face fewer regulatory examinations and lower associated compliance costs. Bank shareholders and investors who may see improved operating efficiency. Customers of those institutions who could indirectly benefit if reduced compliance costs are passed on through lower fees or better rates. Bank employees who spend time preparing for and supporting examinations.
Who is hurt
Federal bank regulators (FDIC, OCC, Federal Reserve) would conduct fewer examinations of a larger set of institutions, potentially reducing their ability to detect emerging risks early. Depositors and borrowers at affected institutions could face slightly reduced oversight frequency, which may increase the time between identification of financial problems. Competing larger banks that already face annual examinations would not receive the same regulatory relief. Taxpayers who backstop the federal deposit insurance system could bear risk if reduced examination frequency allows problems to go undetected longer.
Supporters argue
Supporters argue that the $3 billion threshold was set years ago and has not kept pace with inflation or the growth of community banking, meaning institutions that are functionally "small" by today's standards are subject to the same examination frequency as much larger peers. They contend that well-capitalized, well-managed banks with strong examination track records pose low systemic risk, and that reducing examination burden frees up both bank resources and regulator capacity to focus on higher-risk institutions — improving the overall efficiency of the supervisory system.
Opponents argue
Opponents argue that the period between $3 billion and $6 billion in assets is precisely where institutions can grow quickly and accumulate risk that annual examinations are designed to catch early. They contend that recent bank failures — including several mid-sized institutions in 2023 — demonstrated that problems can escalate rapidly in this asset range, and that extending the examination cycle from 12 to 18 months could allow vulnerabilities to go undetected for a critical additional six months.
Constitutional context
No significant constitutional issue is presented. Congress has broad authority to regulate the banking system under the Commerce Clause (Art. I, §8, cl. 3) and the Necessary and Proper Clause (Art. I, §8, cl. 18), and federal bank examination authority is well-established statutory law. No active constitutional tension applies.
Checks and balances
Congress sets the asset threshold; federal banking regulators (FDIC, OCC, and Federal Reserve) retain discretion to conduct more frequent examinations when warranted, preserving an executive-branch check on the statutory floor.
Historical precedent
The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 similarly raised the asset threshold for less frequent examinations from $1 billion to $3 billion for qualifying well-capitalized, well-managed institutions.