Washington, D.C.— U.S. Congressman Andy Barr (KY-06) introduced legislation to kickstart the economic recovery in underserved areas by easing regulations that hinder new bank charters and incentivizing new bank and capital formation in underserved rural areas. The Promoting Access to Capital in Underbanked Communities Act of 2021 would expand access to banking services in rural areas and help promote financial inclusion for underbanked Kentuckians.
Since the financial crisis, trends in bank consolidation have left many communities without access to bank branches, and burdensome, poorly tailored regulations have deterred new bank formation to fill the gap. These trends disproportionately affect rural areas. The bill directs banking regulators to phase in capital requirements, a major obstacle to bank formation, and make other adjustments that would allow underbanked populations to access banking services. Congressman Barr introduced similar legislation in the U.S. House Representatives in September of 2020.
“The key to economic growth and recovery throughout the country is having access to capital for individuals, families and small business entrepreneurs,” said Congressman Barr. “My proposal rolls back government onerous regulations and paves the way for investment to flood into underserved communities to make sure that the economic recovery is not uneven.”
“We thank Congressman Barr for introducing this critically important legislation, which would help ensure that all Americans continue to enjoy the many benefits of a local bank,” the American Bankers Association said in a statement. “By making it easier for new banks to launch in rural areas of the country, this legislation expands banking access for individuals and businesses, which translates into greater economic activity and growth. The temporary regulatory adjustments provided in this bill are a reasonable step to encourage de novo formation that will benefit local economies.”
“The ICBA is proud to support Rep. Andy Barr’s bill to foster much-needed de novo bank formation to better support more consumers with local banking services,” said Rebeca Romero Rainey, President and CEO of the Independent Community Bankers of America. “The Barr bill would provide crucial regulatory, capital and lending flexibility, which will facilitate the creation of de novo banks, of which only 54 have been chartered since 2010, compared to over 1,300 between 2000 and the great recession. In a time of growing financial concentration, Rep. Barr’s proposal will spur competition for financial services, expand access to credit and financial services for unbanked and underbanked Americans, and support the credit needs and economic vitality of local communities across America.”