Summary of HR 4478 - TRUST Act of 2025

Overview

The TRUST Act of 2025 (H.R. 4478) is a legislative proposal aimed at amending the Federal Deposit Insurance Act. Introduced on July 17, 2025, by Representative Tim Moore (NC-14), with Ritchie Torres (D-NY) as a cosponsor, the bill seeks to adjust the regulatory framework for smaller insured depository institutions.

Purpose and Intent

The primary goal of the TRUST Act is to reduce regulatory burdens on smaller banks and credit unions, specifically those with total assets under $6 billion. By raising the asset threshold from $3 billion to $6 billion, the bill allows these institutions to undergo examinations by federal banking agencies once every 18 months instead of more frequently. This change is intended to promote growth, enhance competition, and improve access to banking services in rural and underserved areas.

Key Provisions

• Asset Threshold Increase: The bill raises the asset threshold for qualifying institutions from $3 billion to $6 billion.
• Examination Frequency: Qualifying insured depository institutions will be examined not less than once every 18 months, reducing the frequency of regulatory scrutiny for smaller banks.
• Regulatory Relief: Aims to alleviate compliance costs and foster a more favorable environment for community banks, which are seen as vital for local economies.

Impact

• Affected Entities: The bill primarily impacts smaller banks and credit unions with total assets under $6 billion. It is expected to benefit institutions that are well-capitalized and well-managed, allowing them to allocate more resources towards community development rather than compliance.
• Community Banking: By easing regulatory pressures, the TRUST Act aims to preserve community banking, enhance competition, and facilitate the flow of resources into local communities, thereby improving access to financial services.

Legislative Process

• Committee Action: The bill was reported favorably by the Committee on Financial Services on September 8, 2025, following a unanimous vote of 48-0 on July 23, 2025.
• Hearing: The bill was discussed during a hearing titled “Regulatory Overreach: The Price Tag on American Prosperity” on April 29, 2025, where various stakeholders provided testimony regarding the need for regulatory reform.

Next Steps

The TRUST Act has been placed on the Union Calendar as Calendar No. 209 and is awaiting further consideration by the House of Representatives.

Conclusion

The TRUST Act of 2025 represents a significant shift in regulatory policy aimed at supporting smaller financial institutions. By reducing the frequency of examinations for qualifying banks, the bill seeks to foster a more conducive environment for community banking and enhance financial access for underserved populations.