Senator John Kennedy (R-La.), a member of the Senate Banking Committee, has joined Senators Ted Budd (R-N.C.), Andy Kim (D-N.J.), and Angela Alsobrooks (D-Md.) to introduce the Tailored Regulatory Updates for Supervisory Testing (TRUST) Act. The proposed legislation aims to update the asset threshold that determines how often community banks must undergo full-scope on-site examinations.
Currently, banks with assets exceeding $3 billion are required to undergo these comprehensive examinations every 12 months. In contrast, banks with fewer assets are allowed an 18-month interval between exams. Lawmakers argue that this requirement places a heavy regulatory burden on small community banks.
The TRUST Act proposes raising the asset threshold to $6 billion, which supporters say would reflect inflation and allow more community banks to qualify for less frequent examinations. This adjustment is expected to help government agencies use resources more efficiently and provide relief to many community banks nationwide.
“Because Washington rules haven’t kept up with inflation, many community banks are tied up in unnecessarily frequent examinations. That isn’t right. Our TRUST Act would update the law to free many community banks from a pointlessly high regulatory burden and let the government use taxpayer money more efficiently,” said Kennedy.
Budd added, “The federal regulatory threshold for well-managed institutions has failed to keep up with inflation, industry consolidation, and modern risk management practices, and as a result has sacrificed both the resources and efficiency of our community banks. Increasing the statutory 18-month exam cycle asset threshold for community banks would free these small, low-risk institutions to do what they do best—provide financial resources to their communities, such as lending more to small businesses and offering more mortgages and private loans. The TRUST Act delivers responsible regulatory reforms that cut unnecessary red tape and modernize federal bank supervision.”
Kim highlighted the importance of community banking: “For rural and small towns left behind in bank deserts like we have in South Jersey, community banks are a game changer – driving economic and community development and supporting our small businesses and entire local economies. By uplifting the promise of community banking in this legislation, we give working families greater flexibility and help unlock paths to buying a home, new jobs, and the greater economic stability they deserve.”
Alsobrooks noted her support for balancing oversight with growth: “Our local businesses, homebuyers, and farmers depend on community banks to get the capital they need. Maintaining rigorous oversight while modernizing the exam process allows well-managed, low-risk institutions to grow responsibly and continue investing in the communities they serve. I’m proud to join this bipartisan, commonsense legislation.”
In the House of Representatives, Reps. Tim Moore (R-N.C.) and Ritchie Torres (D-N.Y.) introduced a companion bill that passed through committee unanimously.
Moore stated: “Community banks and credit unions are essential to the success of our local economies as they’re the place where folks turn when they need help buying a home or starting a business. Local financial institutions shouldn’t be hindered by one-size-fits-all regulations that treat them like major banking corporations. I’m proud to work with Senator Budd on the TRUST Act to ensure these banks have the flexibility to focus on serving hardworking families and building new opportunities for economic growth.”
Torres added: “Community banks play an essential role in expanding access to capital, supporting small businesses, and strengthening local economies especially in communities like the Bronx where neighborhood institutions are often the first stop for entrepreneurs, homeowners, and working families. The TRUST Act is a commonsense bipartisan update that allows regulators to focus their attention where risk is greatest while giving well-managed institutions more room to serve their customers. By modernizing outdated thresholds without compromising safety and soundness we can make oversight more effective and ensure our financial system works for communities like NY-15 that depend on strong local banking relationships.”
The bill has received endorsements from organizations including the American Bankers Association, Independent Community Bankers of America, and American Fintech Council.
Senator Kennedy represents Louisiana in the United States Senate where he leads efforts on policies benefiting veterans, farmers, small businesses as well as national security matters according to his official website. He chairs key committees such as Banking Housing & Urban Affairs while maintaining district offices throughout Louisiana including Alexandria Baton Rouge Lake Charles Monroe New Orleans & Shreveport (source).
