FAIRFIELD COUNTY, Conn. – A bill co-authored by U.S. Rep. Jim Himes to help community banks provide resources to local businesses to stimulate job creation passed Wednesday in the House of Representatives.
The legislation would increase the number of shareholders permitted to invest in a community bank before it must register with the Securities Exchange Commission, which would make it easier for community banks to raise capital to lend to businesses.
“This bill helps banks help growing businesses access the capital they need to expand and create jobs while maintaining important protections for investors,” said Himes, D-4th District. “As we seek creative solutions to our nation’s dangerous jobs crisis, we should look to changes like these that improve the business climate without harming our environment, eliminating health protections, or reducing our ability to invest in the education and infrastructure we know are critical to long-term prosperity.”
Currently, private banks are subject to a threshold of 500 investors, which limits the amount of capital they can raise before they must comply with expensive reporting requirements associated with SEC registration.
The Community Bank Resource Improvement Act (H.R. 1965), co-authored by U.S. Rep. Steve Womack, R-Ark., increases from 500 to 2,000 the number of shareholders permitted to invest in an institution before that entity must register with the SEC or “go public.”
It also brings the law into agreement with SEC rules by increasing the limit from $1 million to $10 million on the value of a company’s assets that potentially triggers SEC registration. Under existing law, a community bank must register with the SEC if it has both more than 500 shareholders and assets in excess of $10 million.
Though the bill passed in the House, it has not made it to the Senate floor for a vote. It was last referred to the Committee on Banking, Housing and Urban Affairs.