Financial CHOICE Act clears House of Representatives
Thursday, the U.S. House of Representatives passed H.R. 10, the Financial CHOICE Act, on a party-line vote in which only one Republican voted with the Democrats to oppose the bill. No Democrats voted to approve the bill.
The actual vote was 233-186, and all five Oklahoma Representatives voted in favor of the bill. As originally introduced by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), the roughly 600-page bill represents Hensarling’s effort to “repeal and replace” Dodd-Frank.
Included in the CHOICE Act are several provisions your OBA supports:
- Develop a process to provide more “tailored” supervision of banks by federal banking regulators, based on an institution’s risk profile and business model rather than some arbitrary “cap” of $5 billion or $10 billion;
- Qualified Mortgage safe harbor treatment is provide for mortgage loans originated and retained by the bank;
- The most controversial provision appears to be the so-called “regulatory off-ramp” for larger institutions if those institutions maintain a 10 percent non-risk weighted leverage ratio.
- Mandates certain changes to the structure of the Consumer Financial Protection Bureau:
- Renaming the Agency, the Consumer Law Enforcement Agency;
- Strips the CFPB’s examination authority and eliminates the Bureau’s authority to enforce allegations of “UDAAP” violations.
- The measure also repeals DFA’s Orderly Liquidation Authority and creates a new bankruptcy statute to facilitate the failure of a large, complex financial institution.
“House leadership stripped out a provision that would have repealed the Durbin Amendment dealing with price controls on interchange fees,” OBA President and Roger Beverage said. “Bankers tried to make the case for greed on the part of big retailers, but to no avail. The fact is the retail constituents outnumbered bankers by about 10-1.”
The bill now moves to the Senate where it will be dramatically changed. Massachusetts Sen. Elizabeth Warren is the “gatekeeper” for Democrats on the Senate Banking Committee. There are some who support many of the provisions contained in H.R. 10, but the bill itself is likely to be ignored.
“Sen. Warren has said on many, many occasions she supports community bank efforts to get some regulatory relief for these banks and their customers,” Beverage said. “So far I haven’t seen any actions that would reinforce her very early statements and before she was elected to the Senate. I guess we’ll just have to wait and see.
“I am encouraged by the fact that there are five Senate Democrats who have either co-introduced or have co-sponsored S. 1102, the CLEAR Relief Act of 2017. If those five Democrats remain committed to community bank regulatory reform, there’s a real shot we can get something done yet this year. We only need three more Democrats, and I’m hoping Senator Warren is one of those three.”
The chairman of the American Bankers Association, Dorothy Savarese, testified before the Senate Banking Committee urging the senators to act quickly and pass a meaningful regulatory relief for community banks. Dorothy, who also spoke at the OBA’s recent Annual Meeting and Convention in Norman, is chairman, president and CEO of Cape Cod Five Cents Savings Bank in Cape Cod, Massachusetts.
Bankers representing the Independent Community Bankers of America and representatives of the credit union trade associations joined with Savarese in calling for the Senate panel to act on several proposals. Importantly, that testimony is entirely in tune with the OBA’s priorities as established by the board of directors:
- Support efforts to require tailored supervision (S. 366);
- Expand the QM safe harbor for mortgage loans originated and retained by banks;
- Generally, streamline and ease paperwork requirements for lenders;
- Provide stress test relief; and
- Enhance flexibility for mutual banks and thrifts.
“Since Dodd-Frank was enacted, 1,976 banks – or 25 percent of the industry – have disappeared,” she told the Senate Committee. “Certainly, consolidation would have occurred without Dodd-Frank, but the increased pace of that consolidation since it was enacted has been extraordinary. More than 43 percent of banks under $100 million in assets have disappeared, as has 17 percent of banks between $100 million and $1 billion.”
Savarese also pointed out it’s not just one regulation that has caused problems; it’s the cumulative effect of more than 25,000 pages of new rules that have been implemented or proposed since the passage of Dodd-Frank in 2010. She also walked the senators through the explanation of why banks today continue to be resilient in a challenging regulatory environment:
“Banks are lending because that is what banks do,” she said. “We have found ways to meet our customers’ needs in spite of the ups and downs of the economy and the regulatory challenges we face.”
Witnesses focused on rising compliance costs along with more complex and costly regulations, which are having a negative effect on the ability of smaller community banks to provide credit in their communities. This is especially true in the case of residential mortgage lending.
“Mortgages in particular remain tightly bound by a web of Dodd-Frank rules,” she told the committee. “According to a recent ABA survey, just 9 percent of single-family mortgage loans made in 2016 were made outside of the ‘qualified mortgage’ box, which means a one-size-fits-all arbitrary regulatory standard is keeping too many creditworthy families out of homes they can readily afford.”
The 2017 Senior Fraud Conferences, hosted by the Oklahoma Insurance Department and featuring the OBA’s Elaine Dodd, will be taking place at various locations throughout June.
These events are FREE for the public and would be a good opportunity to refer your senior customers to attend.
Click here for more information!
Convention is over and summer is officially here for the OBA education department, and while that means things might slow down a bit, it sure doesn’t mean they stop! Take a peek at the upcoming events:
- Marketing and Advertising Compliance, June 20, webinar — As the compliance environment becomes more complex, your marketing department must stay on top of all the rules and regulations. This session can help.
- W-9, W-8BEN and W-8BEN-E New Updated Forms and Info, June 20, webinar — During this program we will do a line-by-line review of the new forms and the subsequent tax reporting to the IRS.
- Regulations X and Z – 2017 Revised Servicing Rules, June 21, webinar — This webinar explains each revision and clarifies what steps each institution must take to assure compliance.
- Critical E-Sign Implementation Issues for Lending, June 21, webinar — What steps must be followed to be in compliance with E-Sign?
- Legal Issues of Checks, June 22, webinar — Learn about many legal aspects of checks, and the compliance issues of Reg CC and BSA. This webinar will serve as the annual training requirement for both these regulations.
- FinTech Trends, June 23, webinar — We will explore current and emerging threats that target mobile devices and FinTech solutions.
- Commercial Real Estate Lending: Property Types, Lease Structures, June 27, webinar — Learn to assess the important qualitative or non-financial factors that influence CRE performance over time.