Senate proceeds on bill easing Dodd-Frank rules for banks

The Senate on Tuesday voted 67-32 to proceed to consideration of a bill that would increase the size of banks subject to certain prudential supervisory requirements under the Dodd-Frank financial reform law while easing some consumer mortgage lending rules.

Titled the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155), the bill is expected to win Senate passage with a strong majority vote in favor. The Senate could vote on the measure as early as this week.

S. 2155 was introduced in November by Senate Banking Committee Chairman Mike Crapo (R-Idaho) and has 25 cosponsors (12 Republicans, 12 Democrats and one Independent).

It would raise the asset size of banks subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) designation of systemically important financial institution (SIFI), which requires stricter regulation, periodic stress tests and creation of “living wills”; and exempt all banks with up to $10 billion in consolidated assets from the law’s Volcker rule, which bars banks from engaging in certain types of speculative investments on their own account.

The SIFI threshold is currently set at $50 billion. S. 2155 effectively raises that to $250 billion, immediately exempting those with assets up to $100 billion and exempting others up to $250 billion within 18 months of the bill’s enactment. The Fed reportedly would be able to apply enhanced prudential standards to institutions if deemed appropriate and would still be required to do stress testing.

Other provisions of the bill would ease consumer lending rules on financial institutions with up to $10 billion in assets, treating more loans as “qualified mortgages” (which receive a safe harbor from rules on ability to repay); exempting some loans from escrow requirements; easing appraisal requirements in rural communities. It would exempt some mortgages from a statutory “member business loan” cap imposed on credit unions and make more banks eligible for a longer, 18-month examination cycle.

S. 2155 – Economic Growth, Regulatory Relief, and Consumer Protection Act

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