On April 14, 2016, the House of Representatives passed H.R. 3791 with a vote of 247-171. Introduced by Congresswoman Mia Love (R-UT-04) and passed out of the Financial Services Committee, HR 3791 requires the Federal Reserve to raise the consolidated assets threshold under the Small Bank Holding Company Policy Statement to $5 billion from $1 billion. If enacted into law, institutions of up to $5 billion in total assets would be able to increase their use of debt to raise bank capital, repurchase stock, or make acquisitions. In addition, consolidated capital rules do not apply and capital adequacy is judged at the bank level only. Qualifying institutions would be prohibited from engaging in any non-banking activities involving significant leverage and may not have a significant amount of outstanding debt that is held by the general public. The bill next goes to the Senate.
While 90% of S corp holding companies have total assets of less than $1 billion in total assets, passage of this bill could have a significant impact on the ability of those in the $1 – $5 billion asset range to raise capital and to expand. Please let us know if this is important to your institution.
