Senators John Kennedy (R-La.), Ted Budd (R-N.C.), Andy Kim (D-N.J.), and Angela Alsobrooks (D-Md.) have introduced the Tailored Regulatory Updates for Supervisory Testing (TRUST) Act, a bipartisan bill designed to update federal bank examination requirements. The legislation seeks to address concerns that current regulations place an undue burden on small community banks.
Under existing rules, banks with more than $3 billion in assets must undergo “full-scope” on-site examinations every 12 months. Banks with fewer assets are eligible for a less frequent 18-month cycle. The TRUST Act proposes raising the asset threshold for the 18-month exam cycle from $3 billion to $6 billion, adjusting for inflation. This change would allow more community banks to qualify for the extended examination period.
“Because Washington rules haven’t kept up with inflation, many community banks are tied up in unnecessarily frequent examinations. That isn’t right. Our TRUST Act would update the law to free many community banks from a pointlessly high regulatory burden and let the government use taxpayer money more efficiently,” said Kennedy.
Budd added, “The federal regulatory threshold for well-managed institutions has failed to keep up with inflation, industry consolidation, and modern risk management practices, and as a result has sacrificed both the resources and efficiency of our community banks. Increasing the statutory 18-month exam cycle asset threshold for community banks would free these small, low-risk institutions to do what they do best—provide financial resources to their communities, such as lending more to small businesses and offering more mortgages and private loans. The TRUST Act delivers responsible regulatory reforms that cut unnecessary red tape and modernize federal bank supervision.”
Kim highlighted the role of community banks in underserved areas: “For rural and small towns left behind in bank deserts like we have in South Jersey, community banks are a game changer – driving economic and community development and supporting our small businesses and entire local economies. By uplifting the promise of community banking in this legislation, we give working families greater flexibility and help unlock paths to buying a home, new jobs, and the greater economic stability they deserve.”
Alsobrooks stated: “Our local businesses, homebuyers, and farmers depend on community banks to get the capital they need. Maintaining rigorous oversight while modernizing the exam process allows well-managed, low-risk institutions to grow responsibly and continue investing in the communities they serve. I’m proud to join this bipartisan, commonsense legislation.”
A companion bill was introduced in the U.S. House by Reps. Tim Moore (R-N.C.) and Ritchie Torres (D-N.Y.), passing unanimously through committee.
Moore said: “Community banks and credit unions are essential to the success of our local economies as they’re the place where folks turn when they need help buying a home or starting a business. Local financial institutions shouldn’t be hindered by one-size-fits-all regulations that treat them like major banking corporations. I’m proud to work with Senator Budd on the TRUST Act to ensure these banks have the flexibility to focus on serving hardworking families and building new opportunities for economic growth.”
Torres commented: “Community banks play an essential role in expanding access to capital, supporting small businesses, and strengthening local economies, especially in communities like the Bronx where neighborhood institutions are often the first stop for entrepreneurs, homeowners, and working families. The TRUST Act is a commonsense, bipartisan update that allows regulators to focus their attention where the risk is greatest while giving well-managed institutions more room to serve their customers. By modernizing outdated thresholds without compromising safety and soundness, we can make oversight more effective and ensure our financial system works for communities like NY-15 that depend on strong, local banking relationships to grow and thrive.”
The American Bankers Association supports this measure along with other organizations representing independent bankers.
Kennedy’s office noted he serves Louisiana as its U.S. senator from multiple district offices statewide while leading initiatives related to veterans’ issues, agriculture policy reform affecting farmers across Louisiana’s rural areas as well as efforts benefitting national security interests.official website He chairs Senate committees focused on banking matters—a key area relevant given his leadership role shaping legislative responses around regulation.official website
