Senate Moves One Step Closer to Community Banking Relief

The latest on bipartisan legislation to address one-size-fits-all banking regulations

On Tuesday, March 5, 2018, the Senate voted to advance a bipartisan bill aimed at community and regional banking regulatory relief. Voting 67-32 to end debate on S.2155, the “Economic Growth, Regulatory Relief, and Consumer Protection Act,” the legislation is now poised for passage in the full Senate. Our own Sean Keathley penned an op-ed in the January/February edition of ICBA’s Bank Director, saying, “In our current political climate, it’s exceedingly rare for any issue to truly energize and engage both sides of the aisle. But community banking regulatory relief may just be that needle in the haystack, bringing a welcome spirit of bipartisanship back to Washington.”

While the far right says the bill doesn’t go far enough and the far left says it goes too far, lawmakers in the middle of both parties crafted legislation addressing the one-size-fits all regulations that community banks have been grappling with for a decade. The legislation increases the threshold at which banks are considered economically critical – from $50 to $250 billion. Sean says, “The post-crisis regulations in Dodd-Frank were designed for the biggest banks to prevent a ‘too big to fail’ scenario. But what that meant for community banks is that they had the same rules applied to them as the corporate behemoths, resulting in community banks having to use inordinate resources to keep up.” 

The nation’s largest dozen banks will still undergo yearly stress tests. The Federal Reserve can also craft tougher requirements for specific banks. In the Bank Director op-ed, Sean says in the past decade, “Community banks did their due diligence in compliance. But what if those resources could be put to use in the communities they serve rather than in complying with onerous regulations?” According to PBS, Senator Mike Crapo (R-ID), the chairman of the Senate Committee on Banking, said “It’s going to free up a phenomenal amount of capital in this country that right now for no good reason, no safety or soundness reason, is being held back.” That means more money invested back into local communities.

For more information about our perspective on community banking relief, contact us

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