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Tuesday, June 2, 2015

Senator Shelby Regulatory Relief Bill Waits for Full Senate Consideration

As previously reported, on May 21 the Senate Banking Committee reported ABIA supported regulatory relief legislation, the Financial Regulatory Improvements Act of 2015 (FRIA) by a 12-10 vote. During the markup, three amendments were adopted, including a Manager’s Amendment by Chairman Shelby and amendments proposed by Senators Toomey (R-PA) and Crapo (R-ID). An amendment by Senator Brown (D-OH) representing the alternative proposal by Democratic members of the Committee was rejected by a party-line 10-12 vote.

The Manager’s Amendment made several technical modifications along with a few substantive changes. In particular, the amendment kept the language in the underlying bill that would exempt insured depository institutions with $10 billion or less in assets from the requirements of the Volcker rule but it gives the regulators discretionary authority to apply Volcker in instances where a determination is made that the institution’s activities are “inconsistent with traditional banking activities” or due to their nature or volume, pose a risk to the safety and soundness of the institution. In addition, the section of the bill authorizing short-form Call Reports would have required banks to have a CAMELS 1 or 2 and to satisfy other criteria as determined by the regulators to qualify. This was modified to require the agencies to jointly develop one or more short forms appropriate for the size and complexity of insured depository institutions. This reflects ongoing work at the agencies to develop simplified reports.

Further, the Toomey amendment raises the $10 billion threshold for CFPB exams to $50 billion and the Crapo amendment prohibits the FDIC, OCC, Fed, CFPB and NCUA from implementing or participating in the DOJ’s “Operation Choke Point” or any similar program going forward. ABA has long-supported legislation similar to the Toomey and Crapo amendments in the House and Senate.