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For the first time, the House passed a bill sponsored by Rep. Mia Love, R-Utah. It would allow community banks and their owners to grow larger without triggering increased federal regulation.
Love, a freshman member of the Financial Services Committee, said expanding the asset threshold from $1 billion to $5 billion would make it easier for community banks that are growing to lend more money.
"These small banking institutions are critical to the people and the local communities in which they reside," Love said on the House floor. "They support the credit needs of families, small businesses, farmers and entrepreneurs."
The bill passed 247-171. All but one Republican supported the bill, while only eight Democrats voted for it.
Rep. Maxine Waters, D-Calif., the ranking member on the committee, argued that raising the asset cap would lead to more mergers and likely more closures for branches in rural and underserved areas. And any bank failures of this size would ripple through the community.
"We cannot allow reckless behavior that benefits investors and bank shareholders at the expense of small banks and the communities they serve," she said.
Love argued safeguards are in place to avoid such collapses and that allowing banks to forgo tougher capital standards would make community banks stronger. A $5 billion asset threshold may allow a holding company to buy a couple of banks and streamline operations, but it wouldn't permit major players such as Goldman Sachs or Wells Fargo to suck up smaller community banks.
Howard Headlee of the Utah Bankers Association backs the bill, believing it would let banks such as the Bank of American Fork and Central Bank of Utah continue to grow during good economic times.
The bill now goes to the Senate.