The U.S. House of Representatives passed a bill co-authored by Rep. Jim Himes that raises a threshold at which community banks come under onerous regulatory oversight, which he said will help them more easily raise capital for lending to small businesses.
Himes worked with U.S. Rep. Steve Womack, an Arkansas Republican, to craft the bill and push it through the House.
Himes spokeswoman Elizabeth Kerr said the U.S. Senate is considering companion legislation, without a timetable set for any vote as of press deadline.
The Community Bank Resource Improvement Act raises the shareholder threshold at which banks must go public or register with the Securities and Exchange Commission, from 500 investors to 2,000.
It also brings the law into agreement with existing SEC rules by increasing the limit from $1 million to $10 million on the value of a company”™s assets that potentially triggers SEC registration. Under existing law, a community bank must register with the SEC if it has both more than 500 shareholders and assets in excess of $10 million.
Some banks reach the 500 shareholder limit simply because the number of people holding their shares increases as a result of inheritance over several generations. While the $10 million asset test serves as an appropriate indication of size for most non-financial companies, even the smallest banks quickly meet this test because a bank”™s business is to lend and take deposits.
“This bill helps banks help growing businesses access the capital they need to expand and create jobs while maintaining important protections for investors,” Himes said, in a prepared statement.
