Community Investment and Prosperity Act
- Sponsor
- Rep. Lawler, Michael [R-NY-17]
- Committees
- Financial Services Committee (primary)
- Last action
- Nov 4, 2025
Bottom line
The bill raises the cap on public welfare investments for national and state member banks from 15% to 20% of their capital and surplus, aiming to boost community development funding.
What it actually does
This bill increases the maximum aggregate amount that national banking associations and State member banks may invest in projects designed to promote the public welfare. Specifically, it raises the cap from 15 percent to 20 percent of the bank's capital and surplus for both types of institutions, providing them with greater flexibility to engage in community development and other public welfare initiatives.
Proponents argue
Supporters argue that increasing the investment cap will empower banks to allocate more capital towards critical community development projects, affordable housing, and other initiatives that benefit underserved populations and stimulate local economies. They contend it provides banks with greater flexibility to meet their Community Reinvestment Act (CRA) obligations and respond to local needs, ultimately fostering economic growth and social well-being.
Opponents contend
Critics might express concerns that raising the investment cap could potentially expose banks to higher levels of risk if public welfare investments are inherently less secure or less profitable than traditional lending activities. They may argue that diverting a larger percentage of capital and surplus to these investments could reduce funds available for core lending, potentially impacting overall financial stability or shareholder returns.
The bill is exceptionally short and clear, making it very accessible for any reader to understand its core purpose quickly.
Section 2(a)
Increase in Public Welfare Investment Cap for National Banking Associations
This provision amends Section 5136 of the Revised Statutes, which governs national banking associations. It changes the maximum aggregate amount that these banks can invest in projects promoting the public welfare from 15 percent to 20 percent of their capital and surplus. This allows national banks to dedicate a larger portion of their resources to community development, affordable housing, and other socially beneficial initiatives.
Supporters argue
Proponents argue that this increase provides national banks with essential tools to better serve their communities, especially in areas with significant needs for affordable housing, economic development, and social services. It aligns with the spirit of community reinvestment and allows banks to be more responsive to local challenges.
Critics contend
Opponents might contend that increasing this cap could encourage national banks to take on investments with potentially higher social returns but lower financial returns or higher risk, which could ultimately impact the bank's financial soundness or shareholder value. They may prefer banks to focus on traditional, lower-risk lending.
Tradeoffs
The provision balances the desire to encourage community investment with the need to maintain financial stability and prudent risk management within national banking associations.
Section 2(b)
Increase in Public Welfare Investment Cap for State Member Banks
This provision amends Section 9 of the Federal Reserve Act, which pertains to State member banks. Similar to the amendment for national banks, it raises the maximum aggregate amount that State member banks can invest in public welfare projects from 15 percent to 20 percent of their capital and surplus. This change grants State member banks the same expanded capacity to contribute to community development and public welfare initiatives.