Housing bill moves forward with institutional housing ban

• Key insight: The White House has indicated its support for the compromise legislative language now moving forward in the Senate. The House passed its own housing bill last month, which included a number of community bank-related riders. 
• What's at stake: Legislative language related to brokered and custodial deposits, as well as other policy reforms aimed at aiding community banks, didn't make it into the new Senate bill.  
• Forward look: It would be difficult — though not impossible — for those community bank provisions included in the House version to be included in the final law. 

WASHINGTON — The Senate overwhelmingly voted to invoke cloture on a housing affordability package late Monday, clearing an important procedural hurdle but cutting a number of provisions favored by community banks. 

The bill passed a vote to invoke cloture by a margin of 84-6, well above the 60-vote threshold necessary to end debate on legislation. Sens. Cindy Hyde-Smith, R-Miss., Chris Murphy, D-Conn., Rick Scott, R-Fla., Tommy Tuberville, R-Ala., and Chris Van Hollen, D-Md., voted no. Sen. Cory Booker, D-N.J., voted present. 

The vote means that the upper chamber can move ahead with a vote to approve the entire package, sending that version to the House for its own floor vote.

The House last month passed its own version of the housing bill that included a number of community bank riders, including a measures that would let banks with less than $6 billion in assets qualify for a limited scope bank examination; encourage de novo bank applications; make changes to brokered and custodial deposit rules; and modify the Federal Deposit Insurance Corp.'s least-cost resolution framework. 

Senate Banking Committee ranking member Elizabeth Warren, D-Mass., initially opposed passing the legislation with the additional provisions — which had wide bipartisan support in the House — making it unclear which, if any, of the provisions might be included in a compromise bill between the two chambers. Because Republicans hold 53 seats in the Senate, unified Democratic opposition could block a cloture vote. 

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But Senate Majority Leader John Thune, R-S.D., last Thursday scheduled the cloture vote, suggesting some form of compromise had been reached. Shortly before the vote on Monday, Senate Banking Committee Chair Tim Scott, R-S.C., and Warren released new legislative text that's expected to be adopted as a substitute amendment. 

While the new text includes some of the House version of housing legislation's reforms, it doesn't include many of the community bank-specific provisions, including the de novo bank provision, $6 billion supervisory threshold provision or those related to brokered or custodial deposit reform. 

The Scott-Warren bill does include a couple of sweeteners for House conservatives. It has language to prohibit large investors from purchasing single-family housing stock, a rare point of agreement between the White House and Warren. 

Specifically, the provision would ban investors who own 350 or more single-family homes from purchasing more homes, although that limit doesn't apply to homes that are built to rent or to those who report positive rent payments to credit bureaus. The prohibition would sunset after 15 years. 

The package also includes a provision that would prevent the Federal Reserve from issuing a Central Bank Digital Currency, a longtime policy objective of some right-wing lawmakers that was cut out of last year's stablecoin bill. The ban would be temporary, expiring in 2030. 

The White House said that it supports this version of the housing package and would sign it into law, which will make it difficult for any Republican — including House Financial Services Committee Chairman Rep. French Hill, R-Ark., who wanted to put in the community bank oversight reform — to make changes. 

"The Administration highlights the inclusion of presidential priorities to ban large institutional investors from competing with individuals in single-family home markets and to halt the development of a Central Bank Digital Currency that could be [sic] pose significant threats to personal privacy and liberty," the White House said in a statement of administration policy.