House: oppose HR 6955, bank deregulation
Honorable Members
United States House of Representatives
Washington, DC 20515M
Please vote NO on HR 6955, Main Street Capital Access Act
Dear honorable member,
On behalf of more than one million members and supporters of Public Citizen, we ask you to Vote NO on the Main Street Capital Access Act, HR. 6955.
This sprawling bill collects more than two dozen deregulatory measures considered by previous congresses that undermine bank safeguards, consumer protection, anti-discrimination measures and more. Most failed to gain any meaningful bipartisan support when considered individually. While Republican leadership baited this bill with a few Democrat-sponsored measures, responsible lawmakers must understand that the overwhelming majority of these policy changes endangers the financial system.
For example, Section 101 reduces solvency (capital) safeguards for new banks. Untested banks must be held to strict standards, not permitted to experiment recklessly with federally insured bank depositor money. Section 201 represents a paralyzing oversight measure by requiring all regulations to be tailored not only to the size of an institution, but its own particular risk profile. In practice, this would allow any bank to sue an agency for alleged breach of this tailoring injunction, which could bring supervision of banking to a standstill. Similarly, Section 205 increases three dozen regulatory thresholds that trigger oversight, from solvency standards, fair lending, community reinvestment and other worthy public policy goals. This invites small mid-sized banks to ignore sound policies adopted over decades. Section 204 raises from $250 billion to $370 billion the asset level that subjects banks to enhanced scrutiny. Already, the elevation of this asset threshold from the original $50 billion set by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act led to irresponsible growth by certain regional banks that precipitated the crisis of 2023, which included three of the four largest bank failures in U.S. history. Section 307 removes “reputational risk” as a component of supervision. Reputation meaningfully impacts bank operations. For example, those banks that serviced convicted sex offender Jeffrey Epstein suffer frequent adverse media mention. Removal of reputational risk in supervision ignores a patent reality. Section 601 waives already insufficient review of bank merger applications for those with less than $10 billion in assets. This will lead to fewer community banks. Similarly, Section 604 limits the ability of the Federal Reserve to consider input from stakeholders during mergers. It also sets a 120-day deadline for automatic approval, even if a regulatory evaluation remains incomplete. This means ill-advised mergers may be consummated for lack of regulatory time. Section 801 expands merchant banking permissions. Merchant banking refers to commercial activities, long a sound policy prohibition. Banks should be lenders, not competitors of those to whom they might lend.
Again, we believe these serious assaults on basic bank safety and merger standards must compel lawmakers to reject this bill.
For questions, please contact Bartlett Naylor at [email protected].
Sincerely,
Public Citizen