Senate resumes Dodd-Frank reform consideration Monday

The Senate is scheduled to convene Monday at 4 p.m. and will resume consideration of the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155), whose revisions to a 2010 financial reform law would reportedly cost taxpayers an estimated $671 million over 10 years.

This cost estimate “is subject to considerable uncertainty, in part because it depends on the probability in any year that a systemically important financial institution (SIFI) will fail or that there will be a financial crisis,” according to a summary of a report the Congressional Budget Office delivered earlier this week to the bill’s chief sponsor, Senate Banking Committee Chairman Mike Crapo (R-Idaho).

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) treats as SIFIs those banking institutions with more than $50 billion in assets. A SIFI is subject to stricter regulation, stress tests and living-will requirements to protect the financial system in the event it must be closed.

The SIFI threshold would rise to $250 billion under S. 2155: The bill would immediately exempt institutions with assets up to $100 billion and exempt others up to $250 billion within 18 months of the bill’s enactment. The Fed would be able to impose stricter supervision of exempt institutions as it deemed necessary.

S. 2155 would also exempt all banks with up to $10 billion in consolidated assets from the Dodd-Frank Volcker rule, which bars banks from engaging in certain types of speculative investments on their own account.

In other provisions, the bill would also 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); exempt some loans from escrow requirements; ease appraisal requirements in rural communities; and reduce small institutions’ reporting under the Home Mortgage Disclosure Act. It would also 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.

Congressional Budget Office Cost Estimate: S. 2155 (March 5, 2018)

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