By a vote of 67-31, the Senate passed the "Economic Growth, Regulatory Relief, and Consumer Protection Act." The bill would make changes to banking regulations implemented following the financial crisis of 2008.

Commentary / Scott Cammarn

The bill makes modest changes to existing financial services provisions, some of which were first adopted in the Dodd-Frank Act. While many of the bill's provisions are directed at community financial institutions with assets of less than $10 billion (including a Volcker Rule repeal with respect to such community banks provided they have limited trading assets and liabilities), a few provisions impacted a broader range of financial institutions:

  • The bill would raise the threshold for certain "prudential" supervision provisions found in Section 165(a) of Dodd-Frank from $50 billion to $250 billion. This includes provisions relating to living wills, liquidity coverage ratio, supervisory stress testing and single-counterparty credit limits. These changes would be effective immediately for bank holding companies with assets of less than $100 billion. For bank holding companies with assets between $100 billion and $250 billion, these changes would become effective 18 months after enactment. Roughly two dozen banks are expected to benefit from this easing of the prudential provisions. Although this is one of the more controversial aspects of the bill, it should be noted that the banking regulators themselves have admitted for some time that these thresholds were set too low and were imposing considerable burden on regional banks that do not pose systemic risk. Banks with assets above $250 billion (of which there are thirteen in the United States) would see no relief from this amendment.
  • The bill would raise to $50 billion (from $10 billion) the threshold for the company-run stress testing and risk committee requirements in Dodd-Frank.
  • The bill would narrow the Volcker Rule's name-sharing restriction, enabling a bank-affiliated investment adviser to use its name on a covered fund, as long as the adviser's (and fund's) name is different from the name of the bank (or bank holding company).
  • The bill would require the banking agencies to amend the Liquidity Coverage Ratio rules to reclassify investment grade municipal bonds that are liquid and readily marketable as the more preferred "level 2B high-quality liquid asset."
  • For certain custodial banks, the bill would exempt from the Supplementary Leverage Ratio calculations any funds deposited at certain qualifying central banks.

The bill also tightens existing law in some respects. For example, the bill would direct the CFPB to adopt regulations extending Dodd-Frank's "ability-to-repay" requirements to Property Assessed Clean Energy (PACE) transactions, would expand existing student loan and veterans credit protections, and would incorporate new fraud alert and credit freeze provisions into the Fair Credit Reporting Act.

The bill now moves to the House, where GOP members have already announced plans to adopt more sweeping changes.

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