Just over two months after the Senate passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (S 2155), the House voted 258-159 (with 33 Democrats voting “yea”) to pass S 2155 without amendments. S 2155 was quickly signed into law by President Donald Trump.
Until recently, S 2155 faced an uncertain future in the House. In June 2017, the House had passed its version of financial regulatory reform (HR 10, better known as the Financial CHOICE Act of 2017 (CHOICE Act). The CHOICE Act was a relatively comprehensive effort to reform the Dodd-Frank Act. Because it included a large number of provisions that would not attract broad bipartisan support, however, the CHOICE Act never was seen as having much, if any, chance of passing the Senate.
When S 2155 was passed, House Financial Services Committee Chairman Jeb Hensarling (R-TX) signaled that the House was not inclined to pass it without incorporating at least some elements of the CHOICE Act. In the interim, however, Mr. Hensarling and other Republicans were persuaded to allow a vote on S 2155 without further amendment, with the promise that additional provisions of the CHOICE Act could be brought as a separate bill or bills, which resulted in House passage of the bill.
Among the highlights of S 2155 are the following:
- Title I enacts a variety of provisions that are designed to facilitate consumer access to mortgage credit. Among other things, Title I creates a qualified mortgage “safe harbor” for financial institutions with less than $10 billion in total consolidated assets, and allows licensed residential mortgage loan originators to temporarily act as a residential mortgage loan originator in a new state, pending approval of the originator’s license application in that state
- Title II reduces the applicability of certain regulations to, and simplifies the capital requirements for, smaller financial institutions or community banks (generally defined as banks with less than $10 billion in total consolidated assets); removes the applicability of the Volcker Rule (including both the covered fund and proprietary trading restrictions) to financial institutions with less than $10 billion in total consolidated assets and minimal trading assets; and reduces the Volcker Rule’s name restrictions for covered funds advised by a banking entity
- Title IV raises the systemically important (SIFI) threshold under the Dodd-Frank Act for bank holding companies from $50 billion in total consolidated assets to $250 billion in total consolidated assets
- Titles III and VI contain a number of consumer-focused provisions, including provisions for credit report security freezes; identity verification for online banking; creating immunity from civil or administrative lawsuits for banks, broker-dealers, investment advisers, insurance companies, and other financial institutions that voluntarily report suspected elder financial exploitation; and protections for student borrowers
S-2155 as passed does not have the far-reaching impact on the Dodd-Frank Act and financial regulation in general than would have been the case with the CHOICE Act. In that sense, it may be the proverbial “half a loaf” that is better than no reform legislation at all, but falling short of major changes to the Dodd-Frank Act. That said, there are several significant provisions in S 2155 that will variously be beneficial to large and small banking organizations.
We continue to review S 2155 and will provide updates as well as more in-depth analysis of key provisions. In addition, we will be monitoring further action, if any, taken by the House or Senate on the Dodd-Frank Act or other financial reform matters and will report on those as they occur. We also are continuing to watch and will report on activity at the federal financial agencies on the Dodd-Frank Act and related financial reform matters.