Earlier quoted context omitted.
Which version of pypy are you using? I can't reproduce the issue with 5.1.2 (ubuntu packaged one). The config uses YAML format. Regardless, config errors should be more verbose. I raised https://bugs.launchpad.net/bandit/+bug/1621552
EDIT: nevermind, couldn't reproduce it with a new virtualenv. Whatever problem occurred in that virtualenv likely wasn't that interesting (wild guess is a package name collision). pypy2-v5.3.1-linux64 / [PyPy 5.3.1 with GCC 4.8.2] If you can't reproduce it with that tarball I'll dig deeper to see the mechanism of failure, maybe it's not pypy and it's just something local to my config or venv.
cd path/to/bandit
virtualenv -p path/to/pypy venv
venv/bin/pip install -r./requirements.txt -e .
venv/bin/bandit-config-generator -o tmp_file
venv/bin/bandit -c tmp_file -r path/to/some/project