WASHINGTON – Sen. John Kennedy (R-LA.) and Sen. Tina Smith (D-MN) are co-sponsoring the Promoting New and Diverse Depositories Act, which would direct the prudential regulators to conduct a study on the barriers that depository institutions face when attempting to enter the banking market.
In addition, the bill would also require a strategic plan to promote more new applicants for bank charters, especially minority depository institutions and community development financial institutions.
Rep. Jake Auchincloss (D-MA.) introduced the bill in the House of Representatives, which has already passed the legislation.
“Small banks and credit unions often provide loans to small businesses and other job creators, especially in rural areas that large banks often forget abou,” said Kennedy. “I introduced this bill to make it easier for community lenders to give Americans more options for accessing credit and making the most of their hard-earned money.”
Helping When Need is ‘Most Acute’
In a statement announcing introduction of the bill, the senators said community banks and credit unions play key roles in America’s financial markets and support huge swaths of the U.S. economy, and are also a major supplier of credit to agricultural producers and businesses, including during times of economic stress “when the need for credit is most acute.”
But, the senators noted, in 2023, however, there are 4,161 fewer banks in the United States (4,672 total) than there were in 2005 (8,833). That represents a nearly 50% decline. Of the banks active today, only 70 have been established since 2010.
In 2001, there were 164 minority depository institutions (MDIs). The number of MDIs reached its peak at 215 in 2008 and declined to 147 in 2022, the senators noted.
Credit unions, of course, have seen a similar reduction in number.
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