House Financial Services Committee Advances Several OBL-Supported Pieces of Legislation

09/17/25

The House Financial Services Committee marks up several pieces of legislation yesterday all of them the OBL supports and have been working with the members of our delegation to get passed. A detailed breakdown of the legislation and their potential impact if they became law is below.

H.R. 2478 - Financial Exploitation Prevention Act of 2025 passed the committee with a unanimous bipartisan vote.

What it does: This bill would allow registered open-end funds (mutual funds) and their transfer agents delay redemption payouts when they reasonably believe a "specified adult" (65+ or otherwise impaired) is being financially exploited. Provides a 15-business-day delay, extendable by 10 business days with internal review and notifications; encourages trusted-contact info collection and recordkeeping.

Why banks should care: Although aimed at mutual funds, the measure pushes the broader ecosystem toward trusted-contact workflows and senior-exploitation safeguards. We expect the committee to work on legislation to allow banks similar protections and disclosures; alignment across your broker-dealer/wealth affiliates will reduce friction.

H.R. 3234 - Reciprocal Deposits Modernization passed the committee with a unanimous bipartisan vote.

What it does: Increases the share of an insured depository institution's reciprocal deposits that are not treated as brokered, via size-tiered allowances: 50% of liabilities ≤$1B; 40% for $1B-$10B; 30% for $10B-$250B; 20% for $250B-$1T; and 2% >$1T. Tightens "agent institution" to banks with CAMELS 1-3.

Impact: Funding flexibility for community and regional banks that rely on reciprocal networks. Heightens the importance of exam ratings (eligibility hinges on CAMELS ratings), and requires clean tracking/reporting of deposit classifications.

H.R. 5262 - Bank Competition Modernization Act passed the committee by a bipartisan vote of 33-19.

What it does: Overhauls how competitive factors are assessed in bank mergers/acquisitions. Requires DOJ/agency analyses to explicitly consider competition from credit unions (insured and non-insured), ILCs/industrial banks, Farm Credit System entities, bank holding companies, and nonbank financial companies. Creates a presumption that transactions resulting in an entity with < $10B in assets are not monopolistic or substantially anti-competitive (specific findings required). Conforming updates to FDIA §18(c) and the BHC Act.

Impact: Levels the field by recognizing non-bank and credit union competition in merger reviews and provides regulatory certainty for sub-$10B combinations.

H.R. 5270 - Stress Testing Accountability and Transparency Act passed with a party line vote of 28-24

What it does: Directs the Fed to codify the methodologies, assumptions, and scenarios used to set components of the stress capital buffer (SCB) via notice-and-comment rulemaking; bars double-counting of capital for the same risks between SCB and risk-based requirements; requires lead-time disclosures for stress tests.

Impact: Improves predictability of SCB outcomes for covered BHCs and could reduce capital volatility.

H.R. 5276 - Community Bank LIFT Act advanced out of committee with a bipartisan vote of 33-19.

What it does: Adjusts the Community Bank Leverage Ratio (CBLR) framework by raising the qualifying asset cap from $10B to $15B and lowering the allowable CBLR range to 6%-8% (from 8%-10%). Requires review and rulemaking by the Fed, OCC, and FDIC.

Impact: Expands eligibility and lowers leverage hurdles for qualifying community banks, offering capital relief and simpler reporting.

H.R. 5317 - Community Bank Deposit Access Act of 2025 passed the committee by a bipartisan vote of 48-2.

What it does: Creates a limited exception for custodial deposits: up to 20% of total liabilities of an eligible, well-capitalized institution not treated as brokered when placed in a bona fide custodial or fiduciary capacity to secure FDIC insurance for a third party; defines eligible custodial arrangements.

Impact: Helps community banks compete for fiduciary/custodial cash programs (e.g., wealth platforms, corporate trust, fintech custody) without triggering brokered-deposit limits, while imposing guardrails and definitions to target true custodial activity.