Congress Enacts Bipartisan, ABA-Advocated Regulatory Reform Bill

In a landmark moment for post-crisis banking policy, the House by a bipartisan 258 to 159 vote today passed S. 2155, the Senate’s regulatory reform bill. The bill’s passage marks an important step toward bringing much-needed regulatory relief to help banks better serve their customers and communities, and President Trump is expected to sign it into law in the coming days.

“Today’s successful bipartisan House vote marks a turning point in the banking policy debate in this country. For the first time in nearly a decade, lawmakers from both parties have chosen to right-size financial rules that were not working as intended and holding the economy back,” said ABA President and CEO Rob Nichols. “We look forward to President Trump signing this bill into law and seeing the benefits it will provide to customers and communities that banks serve across the country.”

The result of a bipartisan compromise among Senate Banking Committee Chairman Mike Crapo (R-Idaho) and Sens. Jon Tester (D-Mont.), Heidi Heitkamp (D-N.D.), Mark Warner (D-Va.) and Joe Donnelly (D-Ind.), the bill includes numerous measures that had their origin in the House Financial Services Committee under the leadership of Chairman Jeb Hensarling (R-Texas). Among the bill’s key provisions are several longstanding priorities in the American Bankers Association’s Blueprint for Growth. The bill will:

  • Provide Qualified Mortgage designation for most mortgages held in portfolio by banks with less than $10 billion in assets
  • Raise the threshold for designation as a systemically important financial institution from $50 billion in assets
  • Apply principles of tailored supervision to larger banks
  • End mandated stress tests for banks with under $100 billion in assets
  • Simplify capital calculations for community banks
  • Provide relief from appraisal requirements for smaller mortgages
  • Institute longer exam cycles for community banks
  • Provide charter flexibility for federal thrifts with less than $20 billion in assets
  • Provide relief from the Volcker Rule for most community banks

The bill is a result of a persistent eight-year advocacy effort as bankers worked to bring ideas to Capitol Hill to help address some of the unintended consequences of Dodd-Frank, and ABA emphasized that the bill is a good first step toward reforming the U.S. regulatory architecture. “There is certainly more to do to recalibrate regulations and tailor them based on a bank’s risk profile and business model, but the common-sense changes included in S.2155 will help America’s banks, particularly community banks, get back to the basics of lending to creditworthy borrowers and businesses,” Nichols said.

A brand-new, just-released bonus episode of the ABA Banking Journal Podcast features Nichols and ABA Chairman Ken Burgess discussing the banker-led advocacy effort that made the bill possible — plus two of ABA’s top regulatory experts laying out what comes next in terms of implementing the changes in the bill. ABA has also prepared a document highlighting key provisions of the bill, along with other resources that can be found at aba.com/S2155.