Community Investment and Prosperity Act
- Sponsor
- Sen. Scott, Tim [R-SC]
- Committees
- Banking, Housing, and Urban Affairs Committee (primary)
- Last action
- Jul 24, 2025
Bottom line
The bill expands the capacity of national and State member banks to make public welfare investments by increasing their statutory investment limit from 15% to 20% of capital and surplus.
What it actually does
This bill increases the maximum aggregate amount that national banking associations and State member banks may invest in projects promoting the public welfare. Specifically, it raises the limit from 15 percent to 20 percent of a bank's capital stock and surplus, amending both the Revised Statutes of the United States and the Federal Reserve Act. This change grants banks greater flexibility to allocate capital towards community development, affordable housing, and other public benefit initiatives.
Proponents argue
Supporters argue that increasing the investment limit will empower banks to better serve their communities by providing more capital for critical public welfare projects, such as affordable housing, economic development in low-income areas, and services for underserved populations. They contend this flexibility is essential for addressing evolving community needs and for banks to effectively meet their Community Reinvestment Act (CRA) obligations, ultimately fostering greater prosperity and stability in local economies.
Opponents contend
Critics might contend that increasing the public welfare investment limit could potentially expose banks to higher risks if these types of investments are perceived as inherently less secure or less profitable than traditional lending. They may also argue that diverting a larger percentage of capital towards public welfare initiatives could reduce funds available for core commercial lending, potentially impacting overall bank profitability or stability, or that it could be seen as an indirect mandate on how banks should allocate capital.
The bill is exceptionally short and straightforward, making it very accessible for any reader to understand its core purpose quickly.
Section 2(a)
Increase in Public Welfare Investment Limit for National Banking Associations
This provision amends section 5136 of the Revised Statutes of the United States, which governs national banking associations. It specifically changes the maximum aggregate amount these banks can invest in projects promoting the public welfare. The current limit of 15 percent of a bank's capital stock and surplus is increased to 20 percent, providing more capacity for such investments.
Supporters argue
Proponents argue that this increase allows national banks to deploy more capital into vital community development projects, affordable housing initiatives, and other public welfare activities, which are crucial for economic growth and social well-being in various communities. They believe it enhances banks' ability to respond to local needs and fulfill their community responsibilities.
Critics contend
Opponents might argue that a higher investment limit could potentially expose national banks to greater financial risk if public welfare investments are perceived as having lower returns or higher default rates than traditional commercial loans. They may also express concern that it could divert capital from other productive uses within the economy.
Tradeoffs
The provision balances the desire to encourage community investment with concerns about bank safety and soundness. It aims to provide flexibility for banks to support public welfare while maintaining regulatory oversight to mitigate undue risk.
Section 2(b)
Increase in Public Welfare Investment Limit for State Member Banks
This provision makes a parallel amendment to the Federal Reserve Act, specifically targeting State member banks. It raises the aggregate investment limit for these banks, allowing them to invest up to 20 percent of their capital stock and surplus in public welfare projects, an increase from the previous 15 percent. This ensures consistency in increased investment capacity across different types of federally regulated banks.