House Votes to Cut Red Tape for Smaller Banks

The House of Representatives passed bills Tuesday (May 12) that would tailor the supervisory requirements and reduce the frequency of examination for smaller financial institutions that are well managed and well capitalized.

The two bills will now be considered by the Senate.

One, the Supervisory Modifications for Appropriate Risk-Based Testing Act of 2025 (SMART Act; H.R. 4437), would tailor supervisory requirements for smaller institutions that are well managed and well capitalized, the House Financial Services Committee said in a Wednesday (May 13) press release.

The bill was passed by the House on a voice vote and awaits a vote in the Senate, according to Congress.gov.

The SMART Act’s sponsor, Rep. William Timmons of South Carolina, said in a Tuesday press release that the bill would allow qualifying institutions with $6 billion or less in assets to alternate between full-scope and limited-scope examinations, which would reduce unnecessary administrative burden, and would allow institutions to request that certain examinations be combined into a single examination cycle.

“[Community banks and credit unions] should be focused on serving families, supporting small businesses and expanding opportunity in their communities, not navigating unnecessary red tape from Washington,” Timmons said in the release. “The SMART Act take a commonsense, risk-based approach to supervision that reduces regulatory burden while maintaining strong oversight and accountability.”

Another bill passed by the House Tuesday, the Tailored Regulatory Updates for Supervisory Testing Act of 2025 (TRUST ACT; H.R. 4478), would allow smaller banks that are well managed and well capitalized to be examined less frequency, according to the House Financial Services Committee’s press release.

The bill was passed by the House on a voice vote and awaits a vote in the Senate, according to Congress.gov.

The TRUST Act’s sponsor, Rep. Tim Moore of North Carolina, said in a Tuesday post on X: “My TRUST Act passed the House unanimously today to relieve an unnecessary regulatory burden on community banks. It’s really simple: small town banks shouldn’t be regulated like Wall Street giants.”

Two other bills from the House Financial Services Committee were also passed by the House on Tuesday, according to the Committee’s press release.

The Save Our Shrimpers Act (H.R. 2071) would require the United States to oppose international financial institutions’ financing for foreign shrimp farming.

The Advancing the Mentor-Protege Program for Small Financial Institutions Act (H.R. 3709) would codify a Department of Treasury program that pairs rural and small financial institutions with larger institutions to strengthen the smaller institutions’ capacity to partner with the federal government and expand access to responsible financial services.