Regulatory Relief Gains Momentum on Capitol Hill

Community bankers have spent years dealing with rising compliance costs, overlapping exams and deposit rules that weren’t built with smaller institutions in mind. Safety and soundness aren’t negotiable. But the framework hasn’t reflected the size, complexity and risk profile of community banks.

That might be changing as Congress revisits several long-standing thresholds and processes.

Since January, Rep. French Hill (R-Ark.), chairman of the House Financial Services Committee, has made regulatory relief a priority under his “Make Community Banking Great Again” agenda. The Main Street Capital Access Act (H.R. 6955), a package of roughly 30 bills that ICBA supports, sits at the center of that conversation. The measures focus on risk-based adjustments designed to reduce the regulatory burden while preserving supervisory standards.

Several ICBA-backed provisions advanced out of committee and were included in the Housing for the 21st Century Act (H.R. 6644), which passed the House with bipartisan support. That vote reflects the recognition that community banks operate under a framework that doesn’t always match their scale or risk profile. 

Attention now turns to the Senate, where the pace and scope of action will determine whether these proposals advance.

Why Does Regulatory Relief Matter for Community Banks?

Regulatory direction shapes how community banks operate, influencing how institutions allocate staff time, manage capital and structure funding strategies. Exam preparation requires significant internal resources, compliance costs influence technology and lending investments, and deposit classifications affect balance sheet strategy. When Congress adjusts supervisory timelines or asset thresholds, those changes move quickly from policy discussion to operational reality.

The bills moving through Congress don’t alter core standards, but they do revise exam frequency, update asset thresholds and modify certain deposit classifications for institutions that meet defined capital and supervisory benchmarks. 

Here are three bills that ICBA is watching and advocating for this year.

How Does the SMART Act Benefit Community Banks?

The Supervisory Modifications for Appropriate Risk-based Testing (SMART) Act would tailor exam cycles for well-managed and well‑capitalized institutions. Qualifying banks would receive full-scope, on-site exams every other cycle, with interim reviews focused on key risk areas. Institutions could request concurrent exams to limit the disruption caused by multiple supervisory visits. 

Regulators would retain the authority to conduct additional reviews when conditions warrant, and banks with recent enforcement actions wouldn’t qualify for the modified cycle.

What is the Community Bank Deposit Access Act?

The Community Bank Deposit Access Act would revise the treatment of certain custodial deposits. For insured depository institutions under $10 billion in assets, custodial deposits wouldn’t be classified as brokered deposits if they remain below 20% of liabilities and the institution meets specified capital and supervisory standards. That change would give qualifying community banks greater flexibility in managing deposits without triggering additional regulatory constraints tied to brokered funding.

How Will the TRUST Act Change Exam Cycles?

The Tailored Regulatory Updates for Supervisory Testing (TRUST) Act would raise the consolidated asset threshold from $3 billion to $6 billion for banks to qualify for an 18-month exam cycle. The existing threshold no longer reflects industry growth, and updating it would extend exam relief to additional well-capitalized and well-managed institutions. The House has already advanced this provision as part of broader legislation, and Senate consideration will determine whether it becomes law.

ICBA’s position and member support

To date, ICBA has been pushing these measures forward through formal letters of support, direct meetings with lawmakers and a coordinated grassroots strategy. We’ve rallied behind both the individual bills and the broader Main Street Capital Access Act package, helping move several provisions out of committee and through the House with strong bipartisan support.

That House vote created real momentum, and now the focus shifts to the Senate, where ICBA is pressing to move either the full package or key provisions across the finish line. The message to lawmakers has remained consistent: These bills offer targeted, risk-based relief that helps community banks operate efficiently without weakening safety and soundness standards.

Of course, momentum in Washington doesn’t sustain itself; it builds and multiplies when lawmakers hear directly from financial institutions in their states. Community bankers play a decisive role in that process by explaining how exam cycles stretch staff resources and how deposit classifications affect funding strategies. When that happens, policy discussion becomes practical and immediate.

Our organization has a strong grassroots effort in place, but direct banker involvement strengthens the message. The ICBA Capital Summit in Washington, D.C., May 4–7, 2026, offers another opportunity to meet face-to-face with lawmakers and reinforce the case for targeted regulatory relief as Senate deliberations continue.

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