What’s the Main Street Capital Access Act All About?

It is estimated that over 60% of all English words have either Greek or Latin roots, either directly or through French and other Romance languages. “Invigorate”, for example, comes from the Latin “vigor”, which means strength, energy, or liveliness.On January 7th, the Main Street Capital Access Act — a bill intended to “reinvigorate community banks and bring common sense back to Main Street” — was introduced to Congress. As it is still in the early stages of the legislative process, the proposed Act faces many hurdles before becoming law, but several of its objectives reflect long-standing industry concerns around regulatory burden, access to funding, and supervisory clarity. If enacted, the bill could have a meaningful impact on community banks. Here are some of the ways the bill could help community banks:1. Tailoring regulation. Existing regulation applies many of the same supervisory and compliance requirements to community banks that were originally designed for the largest, systemically important financial institutions. While some legislation and guidelines have already been adjusted to address this issue, there are still outstanding rules that apply uniformly across institutions, regardless of their asset class. In severe cases, this could result in less local lending, limited economic growth, and accelerated consolidation. The proposed legislation requires regulators to more explicitly tailor supervision based on an institution’s size, complexity, and risk profile. It also raises and indexes certain regulatory thresholds that trigger heightened supervision, helping community banks avoid regulatory creep over time. Together, these changes reduce compliance burdens that disproportionately affect banks with simpler, relationship-driven business models.2. Increasing capital access.The bill aims to help community banks access funding more easily by simplifying common, low-risk sources of liquidity. It directs the Federal Reserve to review and modernize the discount window, making it a more reliable back-up funding option. It also allows well-capitalized institutions to retain reciprocal and custodial deposits without triggering brokered-deposit treatment under specified conditions, giving them more stable funding to support lending and local economic growth. Finally, the proposed Act strengthens the Community Bank Leverage Ratio (CBLR) framework, making it easier for more banks to opt in and enabling well-managed institutions to maintain appropriate capital levels without navigating overly complex risk-based capital rules.3. Lowering barriers to new bank formation.New bank formation has slowed in previous years, with only four new banks opening in 2025. This trend can leave some rural areas and smaller communities underserved, creating “banking deserts”. Banking deserts can drive up costs for households and limit access to capital and investment for small- and medium-sized businesses. The new legislation addresses these challenges by lowering barriers to entry for de novo financial institutions — phasing in capital requirements, allowing temporary leverage flexibility under the CBLR framework during early years, and providing clearer timelines around regulatory approval for mergers and acquisitions. By making it easier to start and grow community banks, the bill aims to expand local banking options and strengthen access to credit in underserved markets.4. Improving supervisory processes.The bill makes supervision and regulation of smaller institutions clearer, fairer, and less burdensome. It introduces more objective criteria for bank ratings with adjusted weighting to better reflect actual risk and prohibits the use of vague concepts like “reputational risk”. Well-managed banks with less than $6B in assets gain options to streamline exams by combining multiple regulatory reviews and benefit from extended exam cycles. The proposed Act also requires regulators to disclose the models, assumptions, and scenarios used in  Federal Reserve stress testing, so covered institutions understand the basis for capital requirements. Together, these changes reduce uncertainty, make oversight more predictable, and ensure regulatory attention is focused where it matters most.5. Improving community bank representation within the Fed.Under the proposed Act, the community bank representative on the Federal Reserve Board has a more explicit role in matters affecting the supervision and regulation of banks with less than $17B in assets, ensuring that the unique perspectives and challenges of smaller, locally focused institutions are considered in policymaking and regulatory decisions.The Main Street Capital Access Act aims to strengthen community banks by improving access to capital and funding, reducing unnecessary regulatory burden, and making supervision more transparent and predictable. By tailoring rules and oversight to the size and risk profile of smaller institutions, encouraging new bank formation, supporting local deposit retention, and ensuring community banks have a stronger voice in the regulatory process, the bill, if passed, would increase access to credit for households and small businesses in local communities. If enacted, the Main Street Capital Access Act could meaningfully reshape how community banks are supervised, funded, and supported. As the bill moves through Congress, its provisions will be worth watching for institutions navigating compliance complexity and local growth demands.