Posts in category: Financial Institutions

Congress at Work: Dodd-Frank Rollback

The Congress at Work series of articles is designed to give you a glimpse of various types of legislation currently under consideration. While either the Senate or the House of Representatives may initiate a bill proposal, be aware that many bills never become law—they may never make it out of committee, be blocked by a Senate filibuster, be delayed, lack sufficient votes, never be agreed upon by the two houses, or be vetoed by the president.

Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) – Sponsored by Sen. Michael Crapo (R-ID) in November 2017, this bill rolls back some of the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The original bill was designed to tighten regulations on financial institutions following the Great Recession of 2008-2009. This bill contains several provisions, including the following:   

• Exempts banks with between $50 billion and $250 billion in assets from some of the restrictions regulated by the Financial Stability Oversight Council.
• Exempts banks with less than $10 billion in assets from some rules entirely, such as the Volcker Rule that bans banks from making certain speculative trades.
• Requires the Federal Reserve to take the size of banks into account when crafting regulations, rather than issuing one-size-fits-all regulations.

The bill was signed into law by the President on May 23.

With the recent issuance and approval of the U.S. Basel III final rule, all financial institutions must assess how these new capital requirements will affect them going forward.   The final rule represents the most comprehensive overhaul of U.S. bank capital standards since the U.S. adoption of Basel I in 1989.  Even though most community banks will not be subject to the market risk and advanced approaches capital rules, they still have to determine whether to elect the option to exclude Accumulated Other Comprehensive Income in tier 1 capital and assess the impact of the changes in asset risk weightings, revisions in Prompt Corrective Action capital thresholds, and capital conservation buffers.  The OCC New Capital Rule Quick Reference Guide for Community Banks is provided here. 

If you have any questions on how the final rule might affect your community bank, please contact John Griesbeck or Joseph Callicutt from our financial institution team at 901.682.2431.