Rep. Andy Barr
Approval would be increased for new banks to provide financial and banking services in America’s rural and other underserved areas under newly introduced legislation offered by U.S. Rep. Andy Barr (R-KY).
“A strong and diverse banking system is essential for a healthy economy,” Rep. Barr said. “This legislation focuses on reducing barriers for new banks to form, preserving the community banking system, and ensuring that consolidation doesn’t limit access to financial services in underserved areas.”
The Promoting New Bank Formation Act of 2025, H.R. 478, which Rep. Barr sponsored on Jan. 16, would require the appropriate federal banking agencies to establish a three-year phase-in period for new financial institutions to comply with federal capital standards and would provide relief for new rural community banks, according to the bill’s text.
H.R. 478 was written in response to the decline in newly chartered banks after enactment of the Dodd-Frank Act in 2010. In 2007, 181 new bank charters were issued, but from 2010 to 2023, an average of fewer than six new charters were issued annually, according to a bill summary provided by Rep. Barr’s staff.
Specifically, H.R. 478 would ease the formation of de novo (new) banks by requiring the federal banking regulatory agencies to jointly issue rules to allow de novo banks up to three years to meet capital requirements. This measured phase-in of capital requirements would mitigate the up-front resource strains of starting a new bank, the summary says.
Additionally, federal banking regulators would be required to replace their pre-approval processes for changes to business plans with a more dynamic review, and would require a joint report to Congress from the federal banking agencies on the principal causes for the low number of de novo banks in the past 10 years and ways to promote more de novo banks in areas currently underserved, including rural and urban areas.
The Mississippi Bankers Association, the Independent Community Bankers Association, and the American Bankers Association endorse the measure.
“By encouraging the creation of new institutions, we can strengthen competition, expand opportunities, and protect the financial system’s backbone — our community banks,” said Rep. Barr.