Financial institutions – including many community and regional banking organizations – have criticized certain aspects of the Dodd-Frank Act for being too onerous and applying a one-size-fits-all approach to banking regulation. In fact, portions of Dodd-Frank were criticized for seeking to fix aspects of the banking business that were not, in fact, broken.
In May, the federal government provided some relief from some of Dodd-Frank’s provisions.
First, the much-discussed “Dodd-Frank Rollback”—the legislative effort by the U.S. Congress to loosen the bank regulatory standards enacted in response to the 2008 financial crisis—has begun. On May 24, the president signed the Economic Growth, Regulatory Relief, and Consumer Protection Act (referred to in the industry as the “Relief Act”), which represents the first significant legislative rollback of the “reforms” enacted under the Dodd-Frank Act in 2010.
Additionally, five federal regulatory agencies—the Federal Reserve, the Federal Deposit Insurance Corp., the Securities and Exchange Commission, the Office of the Comptroller of the Currency, and U.S. Commodity Futures Trading Commission —recently proposed a “simplified” Volcker Rule, aimed at streamlining existing regulatory requirements relating to proprietary securities trading by banks.
The changes in the Relief Act and the simplified Volcker Rule proposal represent modest rollbacks of some of the more onerous requirements of the Dodd-Frank Act. These rollbacks apply to all types of banking organizations, but provide the most relief for small and mid-sized banks.
The Relief Act
While the Relief Act is far from a complete regulatory overhaul, the Relief Act includes several key provisions designed to provide regulatory relief for community and regional banking organizations.
Key changes in the Relief Act intended to benefit for community and regional banks include:
In addition to these provisions, the Relief Act includes numerous other banking, mortgage and consumer protection provisions, including one that will allow consumers to “freeze” their credit files at the three major credit reporting bureaus without charge.
The act also includes several notable securities provisions:
The Relief Act also includes a number of other securities provisions aimed at providing regulatory relief for both operating companies and investment companies.
Proposed Changes to Volcker Rule
On May 30, five federal agencies issued a proposed rule to “simplify and tailor compliance requirements” related to the Volcker Rule. The proposed changes are separate from the Volcker Rule reforms in the Relief Act.
The proposed rule would, among other things:
The changes made under the Relief Act and proposed with respect to the Volcker Rule come within weeks of other major regulatory changes on the U.S. and international fronts, with the FinCEN beneficial ownership rule taking effect on May 11 and the E.U.’s GDPR implementation date of May 25.
Barley Snyder regularly advises banking organizations on all aspects of regulation and compliance under federal and state law. If you have questions, please contact Amanda Jabour Kowalski, Paul Mattaini or Kim Decker.