In the News

French Hill lays out 'Make Community Banking Great Again' plan

by Claire Williams
American Banker
November 14, 2024

WASHINGTON — Rep. French Hill, R-Ark., a  leading contender to lead the Republicans on the House Financial Services Committee , has pitched a vision for community banking policy under a Republican-led administration. 

Hill's proposals, which he framed as a list of wide-ranging banking principles in a document called "Make Community Banking Great Again," are the first major official direction as to what kind of bank-related policies congressional Republicans will pursue. 

And it's looking increasingly likely that the top Republican spot for which Hill is vying will be the chairmanship rather than ranking member.  Regardless  of  whether  he clinches that top spot, however, Hill will be an influential voice on the committee. 

His principles include a further tailoring of regulations for community banks, measures to make it easier for those banks to attract capital and partner with financial technology companies, and changes to the ways in which regulators resolve failed banks. 

"I just believe that we've lost our way in attracting new capital into the industry on a de novo basis, the formation of mid-sized companies through mergers and acquisitions, and in the resolution of a failing institution," Hill said in an interview with American Banker. 

Among the laundry list of proposals, he says that the Federal Deposit Insurance Corp. should scrap its  new brokered deposit rule  proposal, going back to the one that was passed in 2020, and he called for a more transparent process and a mechanism for banks to more easily appeal supervisory determinations. 

Regulators should be barred from ordering institutions to terminate a customer's account because that customer is involved in certain industries, such as firearms and digital assets, and Congress should "fully investigate the conduct of agency personnel to find if their actions and policies were consistent with applicable laws," Hill said in the document. 

Climate stress testing should be an option and isolated from setting capital requirements, he said, and the FDIC, Federal Reserve and Office of the Comptroller of the Currency should submit a plan to Congress to address mail theft-related check fraud and debit card fraud at the point of sale. He also addresses the timing of bank merger approvals, saying that applications should be approved unless expressly denied by bank regulators, and some banks should more easily be able to qualify as  "Subchapter S" institutions, which means they could pay less in taxes. 

Hill said that many of the proposals would require legislation — although some could be accomplished via political pressure on President-elect Donald Trump's regulators. 

"Most have to be tackled by legislation, but instead of bogging down a thought process to find consensus by actually drafting detailed pages and pages of legislation, I thought it was more effective to lay them out as principles," he said. "That way for the things that require legislation, you can find consensus and cosponsors and interested parties to lead the charge." 

Hill said that he would advocate for the tax provisions — such as widening the scope of banks that could qualify for Subchapter S by increasing the maximum number of allowed shareholders — as part of the budget reconciliation process, which overrides filibuster rules. 

Still, many of the plans would likely require at least some bipartisan buy-in. 

While the control of the House is still undecided, it will be a tight margin either way, and only a few absences or a little infighting within the Republican party could quickly derail the possibility that any proposals would pass. 

"I think we will attract strong bipartisan support on both sides of the field with many, many of these ideas," Hill said. 

Hill might find some common ground with Democrats, especially on his ideas around changing the way the FDIC looks to resolve failed banks. Hill suggests that the FDIC should be allowed to waive Least Cost Resolution in some circumstances if a different transaction would increase competition. It should also be more difficult for the FDIC to waive the national deposit cap rule in the acquisition of a failing or failed bank. 

These ideas echo concerns laid out by some Democratic lawmakers, including Sen. Elizabeth Warren, D-Mass., the incoming Senate Banking Committee ranking member, who has  criticized policymakers within her own party , such as acting OCC head Michael Hsu, on how banking agencies handled selling the  assets of failed banks to larger institutions . 

"Senator Warren certainly has had a concern about consolidated power in financial services among the largest globally systemic institutions," Hill said. "I think people on both sides of the aisle share the desire for a broadly defined asset mix across the banking spectrum."