H.R. 758, Promoting Access to Capital in Underbanked Communities Act of 2023

H.R. 758 would direct the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Federal Reserve to issue rules granting new financial institutions three years to meet existing capital requirements. Under current law, new financial institutions typically have about a year to meet those requirements. The bill also would allow new institutions to request permission to deviate from their approved business plan during that three-year period.

Additionally, H.R. 758 would require the federal banking agencies to report on the causes of the small number of new financial institutions created over the last 10 years and recommend ways to promote the creation of new financial institutions in underserved areas. Finally, the bill would reduce the bank leverage ratio for certain rural community banks and allow federal savings associations to invest in, sell, or otherwise deal in agricultural loans.

The costs of the legislation, detailed in Table 1, fall within budget function 370 (commerce and housing credit).

H.R. 758 would impose additional administrative costs on the FDIC, the OCC, and the Federal Reserve for rulemaking, increased supervision, and reporting on new institutions. The operating costs for the FDIC and OCC are classified in the federal budget as direct spending. Using information from the affected agencies, CBO estimates that enacting the bill would increase gross direct spending by $32 million over the 2025-2034 period. However, the OCC collects fees from financial institutions to offset their operating costs; those fees are treated as reductions in direct spending. Accounting for those fees, CBO estimates that enacting the bill would increase direct spending, on net, by $16 million over the same period.

Costs incurred by the Federal Reserve reduce remittances to the Treasury, which are recorded in the budget as revenues.[1] CBO estimates that enacting H.R. 758 would decrease revenues by $16 million over the 2025-2034 period.

H.R. 758 would extend the period for new financial institutions to meet capital requirements, which could affect systemic risk in the banking system and thus increase or decrease fees paid by those institutions to the federal government. CBO cannot estimate the direction or magnitude of the effect on the federal budget of that change.

If the OCC increases annual fees to offset the costs of implementing the bill, H.R. 758 would increase the costs of an existing private-sector mandate on entities required to pay those fees. CBO estimates that the incremental cost of the mandate would be small and would fall well below the annual threshold established in the Unfunded Mandates Reform Act (UMRA) for private-sector mandates ($200 million in 2024, adjusted annually for inflation).

The bill contains no intergovernmental mandates as defined in UMRA.

The CBO staff contacts for this estimate are Julia Aman (for federal costs), Nathaniel Frentz (for revenues), and Rachel Austin (for mandates). The estimate was reviewed by Christina Hawley Anthony, Deputy Director of Budget Analysis.

Phillip L. Swagel

Director, Congressional Budget Office