Late Tuesday (Dec. 5) afternoon, the Senate Banking Committee voted to advance S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act to the full Senate for consideration. It was a strong bipartisan vote: 16-7, including four of the 11 Democrats on the Committee.
“This is the first regulatory relief effort to make it out of Committee since Dodd-Frank was enacted in 2010,” OBA President and CEO Roger Beverage said. “It is far from perfect and does not include some of the ideas for which we have been pushing for about seven years. But it does contain provisions dealing with real estate mortgage lending for our state’s traditional community banks. It’s a start and, hopefully, will lead to other efforts to stop penalizing community banks for the sins of other financial entities.”
Over the course of the day Tuesday, 37 amendments were offered by Democrats and all of them were rejected. The four Democratic senators who are co-sponsors of the bill include Jon Tester (Mont.), Heidi Heitkamp (N.D.), Mark Warner (Va.) and Joe Donnelly (Ind.).
Here are a few of the bill’s highlights, thanks to James Ballentine at the ABA. Without his hard work on the ground and in the halls, this bill would never have made it through the Senate:
- Mortgage loans originated and retained by the bank will be considered “Qualified Mortgages” under the Truth-in-Lending Act, but only for banks with less than $10 billion in assets. This protection would also apply if a mortgage is sold, assigned or transferred to a wholly-owned subsidiary of the bank under certain circumstances.
- Simplify capital calculations for community banks with less than $10 billion in assets. Generally, this provision eliminates traditional community banks collective concerns about the applicability of Basel III.
- Traditional community banks under $10 billion are exempt from the Volcker Rule requirements; naming rights restrictions for all asset managers and funds affiliated with banks are eliminated.
- Appraisal requirements for smaller mortgages are significantly modified, but only for smaller mortgages (under $400,000).
- For banks with less than $10 billion in assets, and that have originated 1000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year they now qualify for an exception to TILA escrow requirements.
- The 18-month exam cycle is expanded to include banks up to $3 billion in total assets.
- Short-form call reports are now authorized for banks up to $5 billion in assets (increased from $1 billion).
- Smaller entities originating mortgage loans are relieved of some HMDA-related reporting requirements it they originate fewer than 500 mortgages or 500 open-end lines of credit for each of the two preceding years.
- Remove three-day waiting period requirement in TILA/RESPA mortgage disclosures if the consumer receives a second offer of credit with a lower rate.
- Clarify that Property Assessed Clean Energy (PACE) loans meet the ability to repay standards.
- Raise eligibility for use of the Fed’s Small Bank Holding Company Policy Statement from $1 billion to banks with $3 billion in assets.
- Require the banking agencies to specify that funds of a custodial bank that are deposited with a central bank will not be taken into account when calculating the supplementary leverage ratio.
- Raise the threshold for designation as a systemically important financial institution from $50 billion to $250 billion in assets.
- Provide charter flexibility for federal thrifts with less than $15 billion in assets.
- End company run stress tests entirely for banks with under $250 billion in assets and change the frequency of remaining stress tests to “periodic.”
There was a manager’s amendment adopted that makes some technical changes to the original bill, and we’re in the process of analyzing those changes right now. We’ll keep you posted.
Congratulations OBA-member banks! This could not have happened without your consistent voice and your consistent support for our goals.