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S.2155 Has Passed the Senate…Now What?

After the financial crash of 08–09, Congress passed the Truth in Lending Act, tightening regulations on the financial institutions. The S.2155: Economic Growth, Regulatory Relief, and Consumer Protection Act is an attempt to fix flaws in the original bill…most glaringly, not distinguishing between massive institutions and smaller community banks.

The Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155)—passed the Senate last Wednesday by a resounding bipartisan vote of 67-31 and is now being considered in the House.

What is bill S.2155

After the financial crash of ‘08–09, Congress passed the Truth in Lending Act, tightening regulations on the financial institutions. The S.2155: Economic Growth, Regulatory Relief, and Consumer Protection Act  is an attempt to fix flaws in the original bill (Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010)…most significantly, not distinguishing between massive institutions and smaller community banks and tightened regulations on the financial institutions to minimize the risk of another financial crash.

What the bill does

  • Permits banks with between $50-$250 billion in assets to run with less regulatory oversight from the Financial Stability Oversight Council (FSOC).

  • Exempts banks with less than $10 billion in assets from some rules entirely, most notably the so-called Volcker Rule which bans banks from making some forms of speculative trades.

  • Requires the Federal Reserve to take size of banks into account when crafting regulations, rather than “one size fits all” regulations as critics contend the Fed has been doing for the past decade.

Comments from: Financial Services Committee Chairman

“As our small banks and credit unions go, so goes the American dream. At a bare minimum, let’s tailor the rules and regulations to the size and complexity of the institution so our banks and credit unions can thrive and thus our constituents can thrive and meet their economic goals and responsibilities.” – Jeb Hensarling, Financial Services Committee Chairman

What Supporters Say…

Supporters argue that the bill reins in elements of a law which went too far and stifled businesses and economic growth with red tape.

“A strong and vibrant economy is important for American consumers, businesses, and the stability of the financial sector,” lead sponsor Crapo said in a press release. “This bipartisan legislation will significantly improve our financial regulatory framework and foster economic growth by right-sizing regulation, particularly for smaller financial institutions and community banks.”

Jim Nussle President & CEO of CUNA also wrote “On behalf of America’s credit unions, I am writing to thank you for your efforts to find compromise on regulatory reform for community financial institutions, efforts which appear to have borne fruit. Credit Union National Association (CUNA) represents America’s credit unions and their 110 million members.” (See full letter submitted at www.cuna.org).

What Opponents Say…

Consumers Union, the advocacy division of Consumer Reports, strongly opposes to S. 2155, The Economic Growth, Regulatory Relief, and Consumer Protection Act. “This bill would undermine important Dodd-Frank banking regulations designed to prevent another financial crisis and would expose home buyers to financial exploitation and predatory lending. In addition, while this bill would eliminate fees for security freezes, which Consumers Union has long fought for in the states, the security freeze section fails to include a number of important consumer protections, such as a provision for the consumer to temporarily “lift” the freeze in order to open credit. Moreover, it could preclude the states from making important improvements to expand protections against identity theft.” writes Maureen Mahoney and Pamela Banks.

As this legislation moves to the House of Representatives, IBAT’s position continues to be getting this bill to the President’s desk on an expedited basis. “This important legislation is critical and long overdue,” Williston added. “IBAT and community bankers across the nation have been working on these issues and begging for help for the past eight years. It’s beyond time to get this important reform enacted for community banking, and we urge prompt and priority movement through the House of Representatives.”

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2018-05-03T16:45:21+00:00