Housing bill passes House with community bank riders

• Key insight: The House is poised to pass a housing affordability package with wide bipartisan margins. 
• What’s at stake: The House bill contains a number of community bank provisions that are absent from the Senate version of the bill. 
• Forward look: Warren’s opposition to those riders will make passage in the upper chamber more challenging, but there are still pathways for the bill to pass. 

WASHINGTON — The House of Representatives passed a number of community bank-favored provisions as part of a larger housing package Monday night, but those riders are already imperiling the bill’s chances of re-passing the Senate. 

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The bill, H.R. 6644, passed the full house Monday evening by a wide bipartisan margin. 

House Financial Services Committee Chairman French Hill, R-Ark., championed his version of a package that aims to increase housing supply by improving builders’ access funding and reducing red tape to build more in both urban and rural communities. A version of the bill passed unanimously out of the Senate Banking Committee and has passed the full Senate. 

But the House’s version of the bill also contains many new provisions that are strongly supported by the banking industry, particularly one that would let banks with less than $6 billion in assets qualify for a limited scope bank examination, and another aimed at making it easier for new banks to form. The bill also makes changes to brokered and custodial deposit rules and the least-cost resolution framework. 

House lawmakers on both sides of the aisle praised not only the housing portions of the package, but the community banking provisions as well. That wide bipartisan support among House Financial Services Committee members suggests that the bill is likely to pass with a large bipartisan margin, although the final vote will be this evening at the earliest. 

The committee’s ranking member, Rep. Maxine Waters, D-Calif., said the legislation “includes a dozen bipartisan provisions to help small banks like Community Development Financial Institutions — that is, CDFIs — and Minority Depository Institutions help to meet the housing and other needs of our constituencies. The bill also addresses concerns from the 2023 bank crisis that will now promote a safe, sound and competitive banking system, one that doesn’t threaten our housing markets or our economy.” 

Rep. Mike Flood, R-Neb., who coauthored the bill, said that there are “meaningful community banking reforms in this legislation.” 

“It eases the burdens for de novo banks so new banks can get off the ground,” he said. “It tailors regulatory requirements for the smallest community banks, and it reforms the bank resolution process.” 

But while the riders have bipartisan support in the House, there’s early disagreement in the Senate. 

“We have a bipartisan bill with unanimous support in the Senate that will help build more housing and lower costs for the American people,” said Sen. Elizabeth Warren, D-Mass., ranking member of the Senate Banking Committee. “I’m glad to see the House move forward on housing proposals, but House Republicans should not hold housing relief hostage to push forward several bank deregulatory bills that will make our community banks more fragile while harming consumers, small businesses, and economic growth. Americans need relief from the housing crisis now.”

Because the bill has already passed the Senate and the differences between the two bills are significant, Congress might form a conference committee or exchange amendments until both chambers are satisfied. If the chambers cannot find a path forward, the legislation will fail and housing advocates return to the drawing board. 

The community banking provisions could proceed without Warren’s vote — there are plenty of Democratic senators who would also like to see community bank oversight reformed — but as the ranking member of the Senate Banking Committee and early champion of the bill in the Senate, her objections carry significant weight.