Community bankers in Kentucky have voiced concerns regarding the inadequacy of one-size-fits-all regulations during a hearing with House lawmakers. They argue that reforms are necessary to better accommodate their needs and to foster the establishment of new banks. The House Financial Services Subcommittee on Financial Institutions convened a field hearing in Richmond to discuss the Main Street Capital Access Act (H.R. 6955). This bill proposes a permanent two-year phase-in period for new financial institutions to meet federal capital requirements, a 120-day timeline for agency decisions on bank mergers and acquisitions, and a mandate for regulators to consider the specific risk profiles and business models of institutions when formulating regulations. Supported by the American Bankers Association, the legislation passed the House with notable bipartisan backing in July and is currently progressing in the Senate.
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Bank leaders shared their experiences with launching new institutions. Jason Hawkins, president and CEO of First United Bank and Trust Co., reflected on the successful establishment of his bank in 1996, highlighting that the current regulatory landscape makes it far more challenging for entrepreneurs today. He noted, "The regulatory barriers to entry, the capital requirements, and the compliance infrastructure needed just to open the doors would be insurmountable for most entrepreneurial bankers. That’s not just bad for banking — it’s bad for competition, innovation, and communities that desperately need local financial institutions."
Kyle Aud, president and CEO of Cornerstone Community Bank, explained that his bank was the first to open in Owensboro, Kentucky, in almost three decades. Despite their success, Aud acknowledged that many aspiring bankers face significant obstacles. He stated, "We were required to raise $20 million and, because of extraordinary community support, raised approximately $7 million more. But our ability to clear the hurdle should not be mistaken for evidence that the hurdle is appropriate for every community."
Timothy Schenk, president and CEO of the Kentucky Bankers Association, emphasized the critical role community banks play in local economies and the need to incentivize new bank formation to maintain a diverse banking landscape. He observed that the number of banks in the U.S. has decreased by over 4,500 in the past two decades, indicating a trend of consolidation. Schenk stated, "In addition to easing regulatory burdens on community banks, the bill would facilitate the formation of new banks in urban and rural areas. The Main Street Capital Access Act would be an important step toward expanding banking access for both individuals and small- and medium-sized businesses while allowing community banks to focus on serving their customers."