Texas House Bill HB2831

Texas 2017 - 85th Regular

Caption

Relating to investments by state banks to promote community development.

Impact

The bill modifies the current regulation relating to bank investments by raising the cap on aggregate investments from 10% to 15% of a bank’s unimpaired capital and surplus. Additionally, it introduces a cap for individual projects, restricting a bank’s exposure to 25% of its unimpaired capital and surplus unless prior authorization is granted by the banking commissioner. This adjustment is expected to allow banks to leverage more capital towards community projects, which could invigorate local economies and foster innovation, particularly in distressed areas.

Summary

House Bill 2831 focuses on allowing state banks to make investments that promote community development. The legislation proposes amendments to the Finance Code, specifying the limitations on investments a bank can make and the extent to which it can commit to specific projects. The intent behind this legislation is to encourage more proactive financial involvement from state banks in their local communities, presumably leading to enhanced economic growth and social benefit in areas that are often underserved or overlooked.

Sentiment

The general sentiment around HB2831 is favorable among proponents who view it as a positive step towards enhancing community investment by financial institutions. Advocates argue this bill will empower local banks to play a crucial role in economic development through targeted investments in their communities. However, there may be some concerns regarding the regulatory implications of allowing banks expanded investment capabilities and whether those expansions could potentially lead to risky financial behavior without sufficient oversight.

Contention

Notable points of contention surrounding this bill could center on the balance between encouraging community investment and ensuring the safety and soundness of the state banking system. While supporters tout the benefits of increased flexibility for banks to invest in local projects, critics may argue that loosening regulations could expose banks and, by extension, their communities to potential financial risks. The debate may reflect broader concerns regarding the role of state banks in managing their capital responsibly while engaging in community development activities.