Regulatory Reform Fact Sheet
Senate Bill Provides Narrow Relief while Regulators Contemplate Critical Capital and Liquidity Rule Implementation
Last updated: August 7, 2018
- Senate Bill (S. 2155) Summary: The Senate bill trumpeted for its impressive bipartisan origins went through nearly a year of development, negotiations, and Congressional intrigue before passage. While targeted primarily toward giving relief to community banks (less than $10 billion), the headline policy of the bill would raise the Systemically Important Financial Institution (SIFI) threshold from $50 billion to $250 billion. It also included HVCRE relief for all adherents and limited HMDA relief for small banks and credit unions. Please see “Additional Background & History” section below for more detail on these provisions.
- Who Now Owns Regulatory Reform? The Fed, OCC, FDIC, and other regulators have broad authority to interpret and implement S. 2155, but they also remain bound by Dodd-Frank, Basel and other pre- existing parameters.
- Presidential Support: Deregulation is a key issue for President Trump. The Treasury Department has released three reports on regulatory reform for financial services, which include proposed legislative and regulatory suggestions. Somewhat surprisingly, the proposals are more measured than prior regulatory rollback efforts.
- Zeitgeist at the Agencies: Even before President Trump, regulators were expressing interest in reviewing regulations and targeted reform. That attitude has been reiterated by new agency leaders, but the appetite appears to be limited to the Volcker Rule (expected rule revisions are imminent) and community bank relief.
- Treatment of CRE: Regulators have already proposed a new regulation to partially address concerns with HVCRE. As stated above, there is also general support for Volcker Rule revisions, which could help support CMBS secondary market liquidity. Reforms on capital and liquidity could ease punitive treatment of CMBS and otherwise free up bank capital for lending in depository institutions, though new regulatory leaders have not signaled an inclination for broader revisions to the Basel framework (no matter the asset class).