Credit: Digital Vision Lab/Adobe Stock
The House Financial Services Subcommittee on Financial Institutions convened this week to assess the challenges facing new bank formation and mergers; a conversation that drew strong support from America’s Credit Unions, which submitted a letter urging Congress to streamline processes that impact both banks and credit unions.
Led by Subcommittee Chairman Andy Barr (R-Ky.), the hearing focused on how regulatory complexity, inconsistent timelines, and unclear supervision are impeding new entrants and accelerating consolidation in the financial sector.
Recommended For You
“Our financial system should support entrepreneurial bank formation, diversified business models and localized financial services,” House Financial Services Committee Chairman French Hill (R-Ark.) said. “A system with no new entrants isn’t safe — it’s fragile.”
America’s Credit Unions echoed that sentiment in its submitted letter, warning that burdensome oversight is limiting both de novo credit union formation and strategic mergers that could strengthen services to underserved communities. “Merger decisions should be based on what is in the best interest of members, not arbitrary oversight,” the letter stated.
Rep. Roger Williams (R-Texas) emphasized the impact on rural areas, noting, “De novo banks are lifelines for small businesses. Without meaningful reforms, we risk losing these community-driven lenders.”
Several expert witnesses supported these concerns. Keith Costello, CEO of Locality Bank, criticized the merger review process as “overly time-consuming,” adding that delays discourage transactions beneficial to consumers. Mary Usategui, CEO of BankMiami, pointed out that of the 4,487 banks operating today, only 85 have launched since 2010, a sign of how rare de novo formations have become.
Amanda Allexson of Simpson Thacher said regulatory expectations now demand near-zero risk from new banks: “This is not practical or healthy … Not all banks will succeed, but new entrants bring vital energy and capital.”
The hearing also highlighted bipartisan support for H.R. 478, the Promoting New Bank Formation Act, which would phase in capital requirements and set deadlines for application decisions.
America’s Credit Unions urged Congress to direct the NCUA to similarly modernize and clarify credit union regulations. “Empowering communities to create and strengthen credit unions is essential to financial inclusion and choice,” the letter concluded.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
