In the News

Hill proposes community banking ideas as he pursues financial services chairmanship

by Alex Thomas
Arkansas Democrat Gazette
November 17, 2024

WASHINGTON -- As U.S. Rep. French Hill, R-Ark., pursues the top spot on the House of Representatives Financial Services Committee, the congressman has proposed multiple ideas for addressing community banking needs in the next Congress.

Hill, of Little Rock, issued a three-page outline of principles last Thursday to guide legislative and oversight work, including actions tailoring regulations to financial institutions, simplifying mergers and acquisitions, and improving community banks' access to capital.

The release of these principles -- which Hill hopes will "make community banking great again," a reference to President-elect Donald Trump's political slogan -- comes as the congressman eyes the chair position on the House Financial Services Committee. The Arkansan is the current committee vice chair under North Carolina Republican Patrick McHenry, who will retire at the end of this Congress.

"We don't want a one-size-fits-all, large bank mandate for a small, family-owned entrepreneurial bank in Arkansas," Hill told the Arkansas Democrat-Gazette. "Right now, we have five enormous banks that have a great portion of the American deposits and banking business, and about 5,000 small banks."

Hill's principles call for regulators to reevaluate supervisory actions affecting financial institutions by considering factors including a bank's capital structure, business model and size. The outline notes support for expediting bank mergers and acquisitions, arguing any transactions should be deemed approved within 120 days of filing unless federal regulators deny the agreement.

The congressman additionally wants community banks to have easier ways of raising capital, including amending current regulations to allow smaller institutions to use debt and equity in raising funds.

"One of the key elements that lowers costs for the bank and allows them to raise capital, increase earnings, and therefore grow and serve customers better -- have more capital for lending -- is the tailoring of regulations," he said.

Arkansas Bankers Association President and CEO Lorrie Trogden supports Hill's principles, telling the Democrat-Gazette the federal government should adjust regulations as community banks operate on a different scale than larger, nationwide banking companies.

"A $100 billion bank is absolutely not the same as a $700 million bank," she said. "They do business completely differently. Their risk profiles are different. The complexity of products and services may be different. Their business models are just very dissimilar, and so, they should all not be treated exactly the same."

Hill understands community banking from firsthand experience. Before entering public office, he served as chairman and CEO of Delta Trust and Banking Corp. During Hill's 15 years leading the bank, Delta Trust and Bank's assets grew from $61 million in 1999 to $430 million in 2014.

Simmons First National Corp. acquired Delta Trust and Banking in March 2014 amid Hill's first congressional campaign.

"I have a keen sense of that balance on how do you attract capital, how do you perform in a safe and sound manner in accordance with regulations, how do you craft a strategy for growth, and how do you compete with the enormous national banking companies," he said. "In my view, these guiding principles really help that locally owned or small privately-held -- or even a small publicly-held -- company have that competitive edge."

Hill is seeking comments on his principles, hoping to receive feedback by Dec. 31.

Hill's ascent to committee chair would add to a resume of private and public sector experiences involving banking and financial work. Before leading Delta Trust and Banking, Hill was an aide to late U.S. Sen. John Tower, R-Texas, and part of the Treasury Department during the George H.W. Bush administration. Hill also served on the President's Economic Policy Council in 1991 and assisted with related policy efforts.

Hill played an instrumental role during this Congress crafting legislation addressing regulatory gaps with digital assets such as cryptocurrencies. The House passed the Financial Innovation and Technology for the 21st Century Act in May with bipartisan approval.

"You'll see future announcements or expressions of my other views for the committee in the coming days," the congressman said.

Trogden said she is "very excited" about Hill possibly wielding the committee's gavel in the 119th Congress, which will convene in January.

"He will just be a tremendous advocate for the banking industry," she said. "He's hands down the most qualified person for the job. No one has that variety of experience, and this is a world he has lived in every day in his private sector life."