Congressman Andy Barr (KY-6) applauded the House’s passage yesterday of bipartisan legislation he introduced with Congressmen Scott Tipton (CO-3) and Lacy Clay (MO-1) to reduce the frequency of on-site examinations for small banks in good standing.

H.R. 1553, the Small Bank Exam Cycle Reform Act, passed the House by a unanimous vote of 411-0.  The legislation would amend the Federal Deposit Insurance Act to raise the asset threshold for banks qualifying for a transition from a 12-month exam cycle to an 18-month exam cycle.  For banks rated as outstanding, the threshold increases from $500 million to $1 billion.  For banks considered in good standing, the threshold increases from $100 million to $200 million.  The legislation also allows federal regulators to raise these thresholds as necessary to prevent unwarranted delays – the thresholds had last been updated in 2006.  The legislation will reduce regulatory costs and burdens for small banks, allowing them to better serve customers, while reducing the costs to taxpayers through unnecessary regulatory reviews of financially sound community banks.

“The small community banks of central and eastern Kentucky have told me time and again that they feel as though they need to install a guest room in their buildings for their prudential regulators – as soon as one leaves, another is coming in,” Congressman Barr said.  “The passage of this legislation would reduce the regulatory burdens for well-managed, fiscally sound small banks, allowing them to provide the services on which the families and small businesses in their communities rely.”

The Small Bank Exam Cycle Reform Act is expected to move about 676 small and community banks nationwide to an 18-month exam cycle.  The legislation will now be considered by the Senate.