Washington, DC – Legislation to spur rural development by broadening the types of investments permissible for national banks to make has been introduced by Senators Mike Crapo (R-Idaho) and Tim Johnson (D-South Dakota). Johnson and Crapo, members of the Senate Committee on Banking, Housing and Urban Affairs, have introduced S. 2487, The Depository Institution Community Development Investments Enhancement Act.
This legislation has the potential to help attract bank investments to over 4,000 middle income distressed or underserved rural areas across the country. It helps communities by increasing the types of investments that national banks can make in public welfare investments like affordable housing and community and economic development. The legislation also authorizes thrifts to invest up to 15 percent of their capital in public welfare investments.
Crapo and Johnson noted that Congress took an important step last year by sending legislation to the President that increased the authority of national and state-member banks to make public welfare investments by raising the ceiling on such investments to 15 percent of capital and surplus from 10 percent. The new legislation will broaden the types of investments that are permissible for national banks to make public welfare investments in affordable housing and community and economic development.
“This legislation builds on a regulatory relief bill passed by the last Congress that made some important reforms,” Crapo said. “Then, in order to get this legislation signed into law, all sides compromised and didn’t let the perfect stand in the way of what was possible. The new legislation that I have introduced with Senator Johnson builds upon this success by broadening the types of investments that are permissible for national and state-member banks and provides federally-chartered thrifts the same authority.”
“Drawing business to rural areas is always a challenge, but this bill will help local economies grow by encouraging solid investments across South Dakota,” Johnson said. “In my rural economic development strategy, the Hometown Prosperity Plan, I describe ‘investing in the public good’ as one way to expand economic prospects for South Dakota. I hope to see this bill move forward as another way to offer housing and community and economic development for South Dakota’s rural communities.”
The change allows banks to respond to critical rural communities needs in more than 4,000 underserved or distressed middle income census tracts throughout the country. In Idaho, it expands the ability of banks to make these investments in 46 census tracts located in 17 counties throughout the state. In South Dakota, the investment authority is expanded in 67 census tracts located in 39 counties. The legislation would also expand the authority for banks to make investments in middle income communities which have been affected by disasters.
“This legislation is good for America's communities,” said Comptroller of the Currency John C. Dugan. “It will permit more public welfare investments that support critically needed affordable housing, urban revitalization, rural development and job creation. I commend Senators Crapo and Johnson for sponsoring the bill, and I hope the Senate will act on it quickly.” The U.S. House of Representatives has passed a similar measure, H.R. 1066.