WASHINGTON, D.C. – Today, the United States Senate unanimously passed two provisions authored by U.S. Senators Angus King (I-Maine) and Mark Warner (D-Va.) to help relieve America’s small financial institutions, like community banks and credits unions, of regulatory burdens so that they are better able to serve their communities.

“Small banks and credit unions are often the financial cornerstones of communities across the country, providing the very credit that helps drive our economy each and every day,” Senator King said. “But while these smaller institutions played no part in causing the financial crisis in 2008, they have often been forced to shoulder the burden of too many poorly-tailored regulations intended to prevent the next one. These provisions will lift some of those onerous requirements and provide parity for accounts between community banks and credit unions, all of which will help smaller lending institutions better serve the communities that rely upon them.”

“Community banks and credit unions are the backbone of the U.S. economy.  According to the FDIC, small banks hold 14% of the nation’s banking assets and make nearly half of all of the smaller loans to farms and small businesses.  That is why I am so pleased to get final passage on our proposals to reduce regulatory burdens on smaller institutions and create parity for certain accounts between community banks and credit unions. This allows community-based financial institutions to do what they do best: support our local economies,” said Senator Warner.

The two provisions, authored by Senators King and Warner, had also been introduced as part of the RELIEVE Act earlier this year. A description of each is below:

• The community bank relief bill allows small bank holding companies with under $1 billion in assets to be regulated under the Small Bank Holding Company Statement (SBHCS), which allows simplified reporting requirements and less stringent capital standards that reflect the traditional banking services that these smaller banks provide. The current SBHCS applies only to institutions below $500 million in assets.  The change will reduce regulatory burdens for 89 percent of bank holding companies, up from 75 percent today. This policy change is supported by the Federal Reserve, with Federal Reserve Governor Daniel Tarullo calling on Congress to boost the SBHCS to $1 billion in speech in November. It has also been endorsed by the Independent Community Bankers of America and the American Bankers Association.

• Currently, interest on Lawyer Trust Accounts (IOLTAs) at banks are able to receive FDIC insurance on deposits; similar accounts at credit unions are not insured.  This bill provides credit unions parity with FDIC-insured institutions when it comes to deposit insurance coverage on IOLTAs and other escrow accounts.  A similar version of this language passed the House by voice vote in May 2014 and has been endorsed by the Credit Union National Association; the National Association of Federal Credit Unions; and the American Bar Association.

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