Thirty-two items under five sections are outlined under Senate financial institution regulatory relief, as sponsored Monday by eight Republicans, eight Democrats and one independent.
A key portion of the regulatory relief package: Section 401, which allows for banks with less than $250 billion in assets to be exempt from “systemically important financial institutions” (SIFIs) oversight by the Federal Reserve, up from the current $50 billion. The change would mean more than two dozen large banks would no longer be covered under the SIFI label.
The relief includes annual stress tests and other stricter regulatory requirements.
Banks with between $100 billion and $250 billion in assets would be exempted from the rules after 18 months, though it would give the Fed the authority to redesignate such firms at a later date.
Other provisions in the legislation, which was forged by Sen. Mike Crapo (R-Idaho and chairman of the Senate Banking Committee) include:
Section 101. Minimum Standards for Residential Mortgage Loans.
This section provides that certain mortgage loans that are originated and retained in portfolio by an insured depository institution or an insured credit union with less than $10 billion in total consolidated assets will be deemed qualified mortgages under the Truth in Lending Act (TILA) while maintaining consumer protections.
Section 104. Home Mortgage Disclosure Act Adjustment and Study.
This section provides regulatory relief to small depository institutions that have originated less than 500 closed-end mortgage loans or less than 500 open-end lines of credit in each of the two preceding calendar years by exempting them from certain disclosure requirements under the Home Mortgage Disclosure Act. It also directs the Comptroller General to conduct a study examining the impact on the amount of data available.
Section 105. Credit Union Residential Loans.
This section provides that a 1- to 4-family dwelling that is not the primary residence of a member will not be considered a member business loan under the Federal Credit Union Act.
Section 106. Eliminating Barriers to Jobs for Loan Originators.
This section provides that an individual will be deemed to have temporary authority to act as a loan originator for 120 days under the S.A.F.E. Mortgage Licensing Act of 2008 if such person is (1) a registered loan originator who becomes employed by a state-licensed mortgage company or (2) a state-licensed loan originator who becomes employed by a state-licensed mortgage company in a different state.
Section 201. Capital Simplification for Qualifying Community Banks.
This section requires that the Federal banking agencies establish a community bank leverage ratio of tangible equity to average consolidated assets of not less than eight percent and not more than 10 percent. Banks with less than $10 billion in total consolidated assets who maintain tangible equity in an amount that exceeds the community bank leverage ratio will be deemed to be in compliance with capital and leverage requirements.
Section 202. Limited Exception for Reciprocal Deposits.
This section provides that certain reciprocal deposits will not be considered to be funds obtained, directly or indirectly, by or through a deposit broker under the Federal Deposit Insurance Act.
Section 203. Community Bank Relief
This section provides that banking entities will be exempt from Section 13 of the Bank Holding Company Act if they have (1) less than $10 billion in total consolidated assets, and (2) total trading assets and trading liabilities that are not more than five percent of total consolidated assets.
Section 203. Community Bank Relief.
This section provides that banking entities will be exempt from Section 13 of the Bank Holding Company Act if they have (1) less than $10 billion in total consolidated assets, and (2) total trading assets and trading liabilities that are not more than five percent of total consolidated assets.
Section 204. Removing Naming Restrictions.
This section permits certain funds to share the same name or variation of the same name as their bank-affiliated investment adviser.
Section 205. Short Form Call Reports.
This section requires the Federal banking agencies to reduce reporting requirements for depository institutions with less than $5 billion in total consolidated assets that satisfy other criteria the Federal banking agencies deem appropriate.
Section 206. Option for Federal Savings Associations to Operate as Covered Savings Associations.
This section permits Federal savings associations with less than $15 billion in total consolidated assets to elect to operate with the same powers and duties as national banks without being required to convert their charters.
Section 207. Small Bank Holding Company Policy Statement.
This section raises the consolidated asset threshold of the Federal Reserve’s Small Bank Holding Company Policy Statement from $1 billion to $3 billion.
Section 208. Application of the Expedited Funds Availability Act.
This section applies the Expedited Funds Availability Act, which governs bank deposit holds, to American Samoa and the Commonwealth of the Northern Mariana Islands.
Section 209. Mutual Holding Company Dividend Waiver.
This section establishes that, in order for mutual holding companies to waive dividends of its subsidiaries, mutual holding company members must have voted to do so in the prior 24, rather than 12, months.
Section 211. Examination Cycle.
This section raises the consolidated asset threshold from $1 billion to $3 billion for well managed and well capitalized banks to qualify for an 18-month examination cycle.
Section 402. Supplementary Leverage Ratio for Custodial Banks.
This section requires the Federal banking agencies to amend the supplementary leverage ratio final rule (SLR) to specify that funds of a custodial bank that are deposited with a central bank will not be taken into account when calculating the SLR, subject to limitations.
Section 403. Treatment of Certain Municipal Obligations.
This section directs the FDIC, the Federal Reserve, and the OCC to classify qualifying investment-grade, liquid and readily-marketable municipal securities as level 2B liquid assets under the agencies’ Liquidity Coverage Ratio final rule.
Section 501. Treasury Report on Risks of Cyber Threats.
This section requires the Treasury Department to submit a report to Congress on the risks of cyber threats to financial institutions and the U.S. capital markets