Today, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, announced the introduction of H.R. 4544, the “American Access to Banking Act.” This bill is designed to promote the creation of new community banks and credit unions known as de novo depository institutions. This includes new Minority Depository Institutions, Community Development Financial Institutions, and rural depository institutions, which serve as lifelines for communities historically underserved by the traditional banking system.

The United States banking system has steadily consolidated over the last few decades, with small community banks and credit unions disappearing due to a historically challenging interest rate environment following the 2007-2009 global financial crisis, along with a steady wave of big bank mergers rubber stamped by regulators. In the years following the financial crisis, de novo bank activity plummeted, with an annual average of sixnew bank charters the past 15 years. This bill seeks to address the void by confronting key concerns from those who are trying to start a new community financial institution.

“It’s no coincidence that we’re seeing a decline in de novo banks. This longstanding trend stems from several factors over the years, including an overly complex application process, a challenging interest rate environment, and for some, the added burden of discrimination and systemic bias faced by individuals wishing to provide financial access to underserved communities. As Trump regulators resume rubber stamping massive bank mergers, like the recent Capital One-Discover deal, and begin rolling back oversight for our largest banks and nonbank financial companies, it’s critical that the United States encourages the creation of new community banks and credit unions to compete and serve our communities,” said Ranking Member Waters. “My bill is designed to do just that. By advancing solutions to key concerns raised by those who are trying to start a new community financial institution, Congress can support the creation of more community financial institutions, including Minority Depository Institutions and Community Development Financial Institutions, and ensure that historically excluded communities across the country have access to equitable and affordable financial services. As we know, community banks and credit unions serve as both a backbone and lifeline for underserved areas, filling critical gaps and expanding credit to families in need as well as entrepreneurs looking to start a small business.”

In a May hearing before the Financial Institutions Subcommittee on de novo bank formation, Democrats invited ReShonda Young to testify, who is working to establish a minority depository institution in Iowa. She shared her story of being repeatedly discriminated against by banks when seeking loans as a small business owner, which led to her suing the Consumer Financial Protection Bureau and compelling the agency to implement Section 1071 of the Dodd-Frank Act to promote small business lending fairness and transparency. She then decided to start her own bank to provide financial access to other similar entrepreneurs seeking a fair shot to start their own business. She discussed several challenges she faced navigating the de novo application process. Her journey highlights the obstacles many new applicants face, including a lengthy and outdated application checklist, limited access to mentorship opportunities and technical assistance, and even the lack of institutional knowledge among regulators who have not recently approved a new charter in years. These challenges underscore the need for a streamlined, transparent, and modernized de novo application process.

Read the full text of the bill HERE.

Read the one-pager HERE.

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