Senate Banking Committee Passes Sweeping, Bipartisan Reforms To Protect Consumers and Help Community Banks, Credit Unions
Dec 05 2017
Sen. Kennedy: ‘Working together, we were able to craft legislation that will protect consumers without stifling economic growth in our local communities. This is meaningful reform desperately needed by our smaller financial institutions.’
WASHINGTON, D.C. –Today, U.S. Sen. John Kennedy (R-LA) applauded the Senate Banking Committee’s passage of a bipartisan bill, the Economic Growth, Regulatory Relief and Consumer Protection Act, that removes unfair regulatory burdens put in place by Dodd-Frank. This bill right-sizes regulation for community banks and credit unions and includes important consumer protections for veterans, senior citizens, and victims of fraud.
“It does not take an expert to see that our community banks, local credit unions, and smaller financial institutions did not cause the 2008 financial crisis,” said Sen. Kennedy. “Yet, under Dodd-Frank, these businesses have had to unfairly bear the full regulatory brunt of the law. After months of negotiation between Republicans and Democrats, we put together a bill that will improve our nation’s financial regulatory framework for Main Street banks while encouraging economic growth in our local communities. We’re protecting consumers without unfairly penalizing community banks and credit unions.”
The Economic Growth, Regulatory Relief and Consumer Protection Act will:
Redefine what constitutes a ‘big bank’:
- Defines a “systemically important financial institution” as a bank with $250 billion or more in assets. It is widely agreed upon that systemically important financial institutions caused the 2008 financial crisis.
- Immediately exempts all banks with less than $100 million in assets from prudential standards.
- Banks with assets between $100-250 million would see regulatory relief after 18 months, but the bill leaves the authority to the Federal Reserve to increase oversight, accelerate the exemption timeline, and/or periodically stress test these banks.
Put in place new consumer protections:
- Requires credit bureaus to provide customers with one free credit freeze and one free unfreeze per year and creates new protections for minors.
- Allows Veterans to exclude certain medical debt from their credit reports.
- Applies consumer protections to real property retrofit loans.
- Extends protections to whistleblowers who disclose the exploitation of a senior citizen.
Provide regulatory relief:
- Adjusts community bank leverage ratio to between 8-10%.
- Reduces short-form call reporting requirements for banks with assets under $5 billion.
- Exempts certain reciprocal deposits from being considered as funds obtained by or through a deposit broker.
- Allows federal savings associations with less than $15 billion in assets to elect to operate like national banks without being required to convert their charter.
- Streamlines requirements for small public housing authorities in rural areas.
- Creates parity among the national securities exchanges by amending the Securities Act of 1933.
Improve consumer access to mortgage credit:
- Exempts small banks ($10 billion and less) from the Home Mortgage Disclosure Act reporting requirements.
- Expands the definition of a qualified mortgage to include those issued by banks or credit unions with less than $10 billion in assets.
- Creates lending parity between credit unions and banks for certain types of loans.
- Ensures the tax deductibility of donated services, like appraisals, to charitable organizations like Habitat for Humanity.
- Eliminates barriers for jobs for registered loan originators moving between states.
The Economic Growth, Regulatory Relief and Consumer Protection Act was introduced by Senators Crapo (R-ID), Kennedy (R-LA), Corker (R-TN), Cotton (R-AR), Scott (R-SC), Rounds (R-ND), Perdue (R-GA), Tillis (R-NC), Risch (R-ID), Moran (R-KS), Donnelly (D-IN), Heitkamp (D-ND), Tester (D-MT), Warner (D-VA), McCaskill (D-MO), Manchin (D-WV), King (I-ME), Kaine (D-VA), Peters (D-MI), and Bennet (D-CO).