Regulatory Relief for Community Banks and Credit Unions

Earlier today, President Trump signed into law a major rollback of regulations.  S.2155, known as the Economic Growth, Regulatory Relief, and Consumer Protection Act, was passed by the House on Tuesday, and passed by the Senate over two months ago.  This banking reform bill, introduced by Idaho Sen. Mike Crapo in November of 2017, does a number of things to undo the burdens placed on smaller financial institutions by the Dodd-Frank Act.  

The following list includes a few of the most significant changes included in this law:

  • The new law raises the asset-size threshold for banks regulated by the CFPB from $50 billion to $250 billion (though the Federal Reserve can still require enhanced enforcement for those institutions between $100 billion and $250 billion).  

  • Qualified Mortgage rules under Regulation Z have been amended so that loans held in portfolio by banks with less than $10 billion in asset can be automatically included as a Qualified Mortgage and excluded from the ability-to-repay underwriting requirements.  

  • The law will extend the examination cycle for many community banks from a 12 to 18 month cycle.

  • Financial institutions with less than $10 billion in assets will be exempt from the Volker Rule, which is a proprietary trading ban.  

  • Credit Unions will now be permitted to extend a member business loan with respect to a one- to four-family dwelling that is not a primary residence.  Prior laws required business loans to be secured by only primary residences.

  • Finally, the rule will also ease the requirements of the Home Mortgage Disclosure Act for smaller mortgage originators.  (Read about those changes here.)

As this law is brand new, financial institutions should watch for guidance from their primary regulator for instructions on how to proceed with applicable changes to the law.

The Economic Growth, Regulatory Relief, and Consumer Protection Act can be found here

HMDA Relief for Community Banks and Credit Unions

New SCRA Notice