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U.S. Financial Services Regulatory News of the Week

Aaron Cutler

Aaron Cutler,

Washington, D.C.

Laura R. Biddle

Laura R. Biddle,

Washington, D.C.

Loyal T. Horsley

Loyal T. Horsley,

Washington, D.C.

17 November 2017

It has been a very full week in financial services regulatory news.

On Monday, the Senate Banking Committee announced they had reached a bipartisan deal to amend certain consumer protection and financial institution laws. The text of the proposed legislation has not been released yet, but the Committee put out a section by section summary.

 

  • The threshold for systemically important financial institutions (SIFIs) will be raised from $50B to $250B. Those institutions under $100B will be immediately exempt from the enhanced prudential standards of SIFIs. For those institutions between $100B and $250B, the Federal Reserve will have 18 months to review the applicability of the enhanced prudential standards and will continue to conduct periodic supervisory stress tests after they are no longer SIFIs.
  • Federal bank regulators will be required to establish simplified capital and leverage requirements for institutions with less than $10B who maintain a leverage ratio between 8% and 10%.
  • Institutions with less than $10B will be exempt from the ability-to-repay rules for residential mortgages that are held on their balance sheets.
  • Institutions with less than $10B in total assets and whose trading assets and liabilities are less than 5% of their total assets will be exempt from the Volcker Rule.
  • Federal bank regulators will be required to implement revised, reduced reporting requirements for institutions with less than $5B in total assets.
  • The threshold for the application of the Federal Reserve’s Small Bank Holding Company Policy Statement, which reduces the regulatory burden on small bank holding companies, will be raised to $3B.
  • Federal savings associations with less than $15B in total assets can elect to operate as a national bank without converting their charter.
  • The CFPB must revisit TRID and provide “clearer, authoritative guidance” on several aspects of the required disclosures.

 

On Wednesday, Richard Cordray announced he would step down as the Director of the CFPB as of November 30. While this has been rumored for months, and only moves up the end of his tenure by a few months as his term expires in 2018, it does represent something of an existential crisis for the agency. The Trump Administration has repeatedly stated its view that financial services is over-regulated and the CFPB has been their illustrative example. Congressional Republicans have been hostile to the agency since its inception. Depending on who President Trump chooses to run the agency, its mandate and activities may drastically change.

We will provide a more detailed summary when the financial regulatory reform bill is released and will provide updates as to the state of the CFPB as they become available.

Aaron Cutler

Aaron Cutler,

Washington, D.C.

Laura R. Biddle

Laura R. Biddle,

Washington, D.C.

Loyal T. Horsley

Loyal T. Horsley,

Washington, D.C.

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