The bill amends Section 10 of the Federal Reserve Act to require the Chair to designate one Governor whose primary background is working in or supervising community banks. That Governor must develop policy recommendations and oversee supervision and regulation of banking organizations supervised by the Board that have less than $17 billion in total assets, and must testify semi‑annually before Congressional banking committees about those activities.
The measure also replaces an older $10 billion asset reference with $17 billion and adds an automatic, annual adjustment mechanism for dollar thresholds tied to changes in nominal U.S. GDP (using Bureau of Economic Analysis data). Finally, it requires the Federal Reserve’s Governor on the FFIEC to consult with the designated community‑bank Governor on related matters.
The changes reallocate attention and reporting around smaller banks and build a formulaic escalation path for the asset cutoff over time, with practical implications for supervision, delegation, and institutions near the threshold.
At a Glance
What It Does
The bill directs the Fed Chair to pick a Board member with demonstrated primary experience in community banking to lead policy and oversight for organizations under $17 billion in assets, mandates semi‑annual Congressional appearances for that member, and replaces the previous $10 billion reference with $17 billion. It also requires annual upward adjustments of the dollar figures based on nominal GDP growth as measured by the BEA.
Who It Affects
Federal Reserve Governors and the Chair’s personnel choices, Federal Reserve supervision staff, banks with less than $17 billion in assets (community banks and some regional banks), and the Federal Financial Institutions Examination Council’s coordination with the Fed. Congressional banking committees gain a mandated cadence of oversight focused on small‑bank supervision.
Why It Matters
This creates a permanent, statutory channel for community‑bank perspective inside the Board and couples that role to both oversight authority and Congressional reporting, shifting how supervision priorities are assigned. Indexing the threshold to nominal GDP makes the cutoff automatic and likely to rise over time, altering which institutions receive 'community bank' treatment without further legislation.
More articles like this one.
A weekly email with all the latest developments on this topic.
What This Bill Actually Does
The bill carves out a statutory role inside the Board of Governors for a Governor who has primary, demonstrable experience working in or supervising community banks. The Chair must select that Governor and assign them responsibility for crafting policy recommendations and overseeing the supervision and regulation of banking organizations the Board supervises that fall below an asset threshold.
The text replaces an older $10 billion reference with $17 billion as the baseline cutoff for that scope.
Beyond naming and duties, the bill directs that the designated Governor — if not the Vice Chair for Supervision — appear twice a year before the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services to report on supervision efforts, objectives, and plans for banks under the threshold. That reporting requirement establishes an institutionalized line of Congressional visibility into how the Fed treats smaller supervised institutions.To prevent the threshold from stagnating, the legislation requires annual adjustments to the dollar figures mentioned in the amended Fed statute and a cross‑reference in the FFIEC statute.
The adjustment uses nominal U.S. GDP statistics from the Bureau of Economic Analysis and compares the covered year to the highest nominal GDP year in the preceding five years to compute any percentage increase. The bill also amends the FFIEC Act to require the Fed’s FFIEC governor to consult with the community‑bank‑experienced governor on matters tied to those thresholds.Operationally, the measure does not rewrite enforcement powers or change prudential standards, but it reallocates internal responsibility for supervision of smaller institutions and adds formal consultation and reporting obligations.
That will affect internal Fed governance (who leads small‑bank policy), external transparency (semi‑annual testimony), and the universe of banks that receive focused attention because the asset cutoff is higher and slated to grow automatically with nominal GDP.
The Five Things You Need to Know
The Chair must select a Board member with demonstrated primary experience working in or supervising community banks to develop policy and oversee supervision of banking organizations under $17,000,000,000 in total assets.
The bill replaces an existing statutory reference to institutions with less than $10 billion in assets with a $17 billion cutoff and ties the designated Governor’s responsibilities to that new figure.
If the community‑bank Governor is not the Vice Chair for Supervision, that Governor must appear before House Financial Services and Senate Banking semi‑annually to report on supervision and regulatory plans for banks below the threshold.
The statute mandates an annual adjustment of the dollar thresholds based on nominal U.S. GDP: the Board must increase applicable dollar figures by the percentage change between the covered year and the highest nominal GDP year in the preceding five years, using BEA data.
Section 1004(a)(3) of the FFIEC Act is amended to require the Fed’s FFIEC governor to consult with the community‑bank‑experienced Governor on matters related to supervision and regulation of institutions below the indexed threshold.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Short title
States the Act’s name as the 'Community Bank Representation Act.' This is purely nominative but signals the bill’s focus for interpretation and stakeholder communications.
Removes $10 billion legacy reference
Strikes the existing phrase referring to firms 'having less than $10,000,000,000 in total assets.' The deletion clears the way for a new, higher baseline and signals an intent to change which institutions are treated as 'community' for the Board’s internal governance and supervisory focus.
Chair selection of community‑bank‑experienced Governor
Adds a requirement that the Chair select one Board member with demonstrated primary experience in community banking to draft policy recommendations and oversee supervision for banking organizations under $17 billion. Practically, this creates a named internal advocate/lead for smaller institutions and allocates explicit oversight responsibility to a specific Governor, rather than leaving that role implicit or distributed across the Vice Chair and staff.
Creates a separate 'community bank member' subparagraph and hearing requirement
Splits paragraph (12) to preserve the Vice Chair for Supervision while creating subparagraph (B) for the community‑bank Governor. It imposes a semi‑annual Congressional appearance requirement about supervision of banks under $17 billion. The change formalizes Congressional visibility into small‑bank supervision and clarifies reporting lines when the Vice Chair for Supervision and the community‑bank Governor are different people.
Automatic annual indexation of dollar thresholds to nominal GDP
Directs the Board to adjust each relevant dollar figure at the end of any year in which nominal GDP increases, using BEA data. The adjustment computes the percentage increase between the covered year and the highest nominal GDP year in the previous five years. This is a mechanical indexing rule that will raise the $17 billion cutoff over time without further legislation, but its particular comparison method (to the highest prior five‑year GDP year) may produce uneven, stepwise increases.
FFIEC coordination: consultation requirement
Adds language requiring the Governor who represents the Fed on the Federal Financial Institutions Examination Council to consult with the designated community‑bank Governor on matters related to the supervision and regulation of institutions below the threshold. That creates a statutory consultative channel between Fed governance and interagency supervisory coordination at FFIEC.
This bill is one of many.
Codify tracks hundreds of bills on Finance across all five countries.
Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Community banks and holding companies with assets below $17 billion — they gain a named Governor responsible for tailoring supervisory policy and oversight attention to smaller institutions, potentially leading to more targeted examinations and guidance.
- Congressional banking committees — they receive a guaranteed, semi‑annual witness focused on small‑bank supervision, improving transparency and enabling more consistent oversight of Fed treatment of community institutions.
- Federal Reserve Governors with community‑bank experience — the statute elevates their influence inside Board deliberations by creating a distinct role linked to both policy development and supervisory oversight.
- FFIEC participants — the explicit consultation requirement can strengthen coordination between the Fed’s FFIEC representative and small‑bank policy leadership, potentially harmonizing interagency approaches to community‑bank issues.
Who Bears the Cost
- The Board of Governors and the Chair — the Chair must allocate a Board seat to this function and accommodate semi‑annual hearings, which reallocates internal leadership responsibilities and may require staffing and reporting changes.
- Federal Reserve supervision staff and Reserve Banks — oversight responsibility concentrated in a specific Governor could shift supervisory priorities and require reorganizing examiner assignments, training, or guidance to align with the new lead.
- Banks near the $17 billion threshold — institutions close to the cutoff face strategic and compliance uncertainty (and potential arbitrage) as the indexation rule changes eligibility for the community‑bank supervisory regime.
- Smaller regional banks that lose priority — by raising the cutoff and singling out a community‑bank lead, some mid‑sized banks might see changes in supervisory approach that increase operational uncertainty and compliance planning costs.
Key Issues
The Core Tension
The core dilemma is whether formalizing a Board seat and public reporting for community‑bank interests improves supervision for smaller institutions by injecting subject‑matter expertise, or whether it fragments and politicizes the Fed’s unified supervisory regime—giving certain institutions tailored treatment at the possible cost of inconsistent prudential oversight and increased regulatory arbitrage around the indexed asset cutoff.
The bill creates bright lines around who speaks and leads on small‑bank supervision, but several operational ambiguities remain. The term 'demonstrated primary experience working in or supervising community banks' is undefined in statute, leaving the Chair latitude to interpret qualifications; that could institutionalize a particular background or invite political considerations into selection.
The statute assigns the designated Governor to 'oversee the supervision and regulation' of covered banking organizations but does not specify the mechanics of that authority—whether it is supervisory policy leadership, direct control over exam priorities, or a coordinating role with Reserve Banks and the Vice Chair for Supervision.
Indexing dollar thresholds to nominal GDP removes the need for further legislation to raise the cutoff, but the prescribed comparison (to the highest nominal GDP year in the prior five) might produce lumpy increases or anomalous adjustments during volatile periods. The statute instructs the Board to adjust 'each dollar figure' in a set of provisions; implementing agencies must map exactly which statutory references and regulatory thresholds are in scope.
Finally, mandatory semi‑annual testimony increases Congressional visibility but risks politicizing supervisory choices if testimony becomes oriented around constituency concerns rather than supervisory independence.
Try it yourself.
Ask a question in plain English, or pick a topic below. Results in seconds.