Make Them Hear You! Regulating the Banks

Make Them Hear You! is a weekly feature on KGNU, produced by Chris Mohr, letting listeners know how they can have their voices heard on issues up before Congress. You can hear it Wednesday mornings at 8.20am during the Morning Magazine.

Economic Growth, Regulatory Relief, and Consumer Protection Act has made it out of committee with strong Republican support and some support of Senate Democrats like Michael Bennet. This bill allows institutions with less than $10 billion in assets to waive ability-to-repay requirements for certain residential-mortgage loans. It exempts banks with assets valued at less than $10 billion who are now prohibited from engaging in proprietary trading or hedge funds and private-equity funds. Smaller banks are also exempted by the bill from specified capital and leverage ratios. It reduces inspection requirements and environmental-review requirements for certain smaller, rural public-housing agencies. Provisions relating to stress testing, leverage requirements, and the use of municipal bonds for purposes of meeting liquidity requirements are loosened for smaller banks.

One plus of this bill was its more transparent debating process, signaling a return to bipartisanship and regular order. Lobbyists for community banks claim that S. 2155 would stimulate local economic growth by providing much-needed community bank regulatory relief while preserving vital consumer protections and effective regulatory supervision. While most of the lobbying is coming from community banks and many of the big banks are sitting this one out, opponents claim S. 2155 is the second part of a massive corporate giveaway.

Dodd-Frank dealt with the ‘too-big-to-fail’ banks by setting a threshold of $50 billion for a bank to qualify for enhanced banking standards. Those standards now will apply only to banks with over $250 billion, a move strongly supported by community banks.

Opponents fear this may not be the end of regulatory rollback efforts. Mick Mulvaney was recently reported as calling this legislation a ‘beach head’ for additional rollbacks.  The bill puts no real consequences on credit bureaus like Equifax for mistaken and breached data.

Senator Michael Bennet claims that one of the best aspects of S.2155 is that it accepts much of the core Dodd-Frank regime: enhanced prudential standards for the largest banks, a living will and failure resolution regime, and enhanced consumer financial protections.

But opponents fear increased systemic risk in the banking sector. There are 30+ banks offering custodial financial services, and this bill benefits only the two largest custodial banks, giving them an unfair competitive advantage and concentrating risk in the system.

Opponents also are outraged by the elimination of Anti-Racial Discrimination Data Reporting. Michael Bennet claims this is only for banks with fewer than 500 home mortgages, but in some rural areas that can be 25% of all mortgages.

Opponents this bill would deregulate 25 of the largest 38 banks in the United States. If you have thoughts about S. 2155, you can share them with your Senators, especially Michael Bennet.

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