S 2155

Goals

Provide an overview of US Bill S.2155, including the details on the bill, how it works, and some examples of how companies have incorporated it.

Early Findings

Overview

  • The full title of bill S.2155 is the "Economic Growth, Regulatory Relief, and Consumer Protection Act."
  • The overall purpose of the bill is to relax some of the regulations for banks put in place after the banking crisis and the enactment of the Dodd-Frank act.
  • The bill had the support of the Executive Office and was sponsored by Republicans. It was passed into law on 05/24/2018.
  • The overall summary of the bill was that it would decrease the oversight on large banks (assets between 50-250 billion), and exempt community banks (assets under 10 billion) from some regulatory rules. Finally, it requires that the Federal Reserve take bank size into account when crafting regulations.

Application

While the full scope of the bill can be found here, some highlights include;
  • Simplified capital rules, especially for smaller banks, including exemption from Dadd-Frank for banks with assets of $50 billion to $100 billion immediately and assets of $100 billion to $250 billion 18 months after enactment, relief from Basel III for banks with less than $10 billion in assets, an increase of the asset threshold for banks to be eligible for the Federal Reserve’s Small Bank Holding Company Policy Statement, and a relaxation of commercial real estate rules (HVCRE) for large banks.
  • Simplified mortgage rules, including relaxing Truth in Lending Act escrow requirements for small lenders, appraisal exemption for certain rural loans, and "lenders of all asset sizes with a “satisfactory” CRA rating and that originate fewer than 500 closed-end mortgage loans or fewer than 500 open-end lines of credit will be exempt from the new Dodd-Frank HMDA data fields," among other changes.
  • Less reporting and exams, including increasing the asset threshold for 18-month exam cycle to $3 billion, shorter form call reports, removal of stress testing for banks with assets between $10 billion and $50 billion, and removal of risk committees for publicly held institutions with assets between $10 billion and $50 billion.
  • Also, the rule will allow for more flexibility for Mutual Banks, exemptions from the Volcker Rule, changes to reciprocal deposits classification, and a change in classification for certain municipal bonds.

Proposed next steps:

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As the initial research was only able to cover the bill in broad terms, we recommend continued research to look specifically at the affects of bill S 2155 on large banks (assets between 50-250 billion), small banks (assets under 10 billion), and mortgage lenders, providing 5-7 insights on the affect of the bill for each.
Additionally, we recommend continued research to provide 2-3 case studies on how banks have reacted to the passing of S.2155, including how they have changed their programs, if they are positive, negative or neutral on the passing of the bill, and focusing specifically how they have altered their reciprocal deposit arrangements.