Rep. Hill Blames the Senate for Failing to Pass Bank Relief

Why It Matters

The deadlock threatens to keep compliance costs high for community banks, limiting their ability to fund housing and small‑business loans. Resolving it could reshape regulatory burdens and spark broader financial‑sector reforms.

Key Takeaways

• Senate stripped community‑bank reforms from housing bill
• Hill urges bankers to lobby senators for relief
• CFPB replacement rules for 1033 and 1071 pending
• Proposed fraud coordination includes retailers, Secret Service
• Trade: community‑bank bills for crypto legislation discussed

Pulse Analysis

French Hill’s latest appeal underscores a growing partisan rift over how community banks should be regulated. While the House has attached relief measures—such as easing brokered‑deposit rules and lowering capital requirements—to the 21st Century ROAD to Housing Act, the Senate’s version omitted these provisions, leaving banks with assets under $10 billion facing higher compliance costs. For lenders that originate roughly 60% of residential construction loans, the legislative impasse could translate into tighter credit conditions for homebuilders and a slowdown in housing starts.

Beyond the housing bill, Hill is pressing the Consumer Financial Protection Bureau to replace two Biden‑era rules: the 1033 rule governing personal financial data rights and the 1071 rule that mandates extensive small‑business lending data collection. With Acting CFPB Director Russell Vought’s tenure ending in August and no confirmed permanent head, the agency’s regulatory agenda remains uncertain. Hill argues that a one‑size‑fits‑all approach, epitomized by Dodd‑Frank, penalizes smaller institutions, and he seeks a tiered framework that aligns oversight with a bank’s size and complexity.

Hill also highlighted the need for a unified anti‑fraud strategy, proposing that the Secret Service, bank supervisors, state attorneys general, and even retailers collaborate to curb electronic debit and credit fraud. The suggestion to break out fraud losses on call reports could improve transparency for investors and regulators. Meanwhile, Senate Republicans are exploring a legislative trade—pairing Hill’s community‑bank deregulation bills with the CLARITY Act or Digital Asset Market Clarity Act—potentially linking traditional banking reforms to the burgeoning crypto regulatory agenda. If successful, the deal could accelerate both sectors’ legislative timelines, reshaping the financial landscape in 2024.