May 2018
UPDATE:  This article was updated on May 24, 2018 

On May 24, President Trump signed into law a banking deregulation bill (S.2155) that loosens rules and requirements imposed on lenders by the Dodd-Frank Act of 2010. The legislation contains a number of provisions affecting community banks and institutions below the $10 billion asset threshold, as well as measures designed to assist lenders above this ceiling.

Senate Republicans and Democrats jointly crafted S.2155, The Economic Growth, Regulatory Relief, and Consumer Protection Act, with the goal of spurring conditions for growth rather than engaging in a concerted effort to repeal and replace the Dodd-Frank Act. The House this month agreed to bring S.2155 to a floor vote, without amendments, following a weeks-long standoff between House Republican leadership and their Senate counterparts over whether to add new provisions to the bill. On May 22, The House of Representatives voted 258-159 to send the bill to the President’s desk.

Community Banks (Under $10 billion)
  • Creates a new “Community Bank Leverage Ratio,” defined as the ratio of capital to unweighted assets. Banks with a ratio above 8 percent-10 percent will be exempt from all other leverage and risk-based capital requirements. Regulators may disqualify a bank from this relief based on an assessment of the bank’s risk profile.
  • Exempts banks from the Volcker Rule if their total trading assets and liabilities comprise less than 5 percent of their overall assets.
  • Permits institutions that are not well-capitalized to accept reciprocal deposits if they meet other standards and restricts the amount of interest that may be paid on these deposits.
  • Grants federal prudential regulators the discretion to allow banks under $5 billion in assets to file Call Reports semi-annually rather than quarterly.
  • Amends the Fed’s Small Bank Holding Company Policy Statement by increasing the eligibility asset threshold size from less than $1 billion to less than $3 billion.
  • Broadens the classes of institutions eligible for QM lending, under certain conditions, and requires that loans with QM status be held in portfolio over their lifetime by the originator. 
  • Provides relief from the three-day waiting period under TRID if a second mortgage offer results in a lower APR. This section also calls on CFPB to provide more definitive guidance on TRID.
Community and Mid-Sized Banks
  • Relaxes HMDA reporting requirements for institutions that originate fewer than 500 closed-end mortgages or open-end lines of credit in each of the two prior years, subject to achieving certain CRA ratings.
  • No longer requires publicly traded banks with less than $50 billion in assets to create mandatory risk committees.
  • Raises the threshold for company-run stress tests from $10 billion to $250 billion.

For questions and a more detailed analysis, please contact Polsinelli’s Banking and Financial Institutions and Public Policy practice groups.