On May 24, 2018, President Donald Trump signed into law S.2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, which amends the 2010 Dodd-Frank Act and addresses regulatory tailoring for certain bank holding companies (BHCs), regulatory easing for community banks, and new consumer protections. Regulatory requirements for large BHCs, those with more than $250 billion in assets, are largely unchanged. The new law originated in the Senate and was passed with a bipartisan vote on March 14, 2018; the House of Representatives passed the bill without amendment on May 22, 2018 by a 258-159 margin signaling bipartisan support.
Highlights of the new law (as previously outlined in our March 2018 Regulatory Alert) follow.
Regulatory tailoring for certain BHCs
Regulatory easing for community banks
New consumer protections
The law introduces a variety of new consumer protections, including:
The Economic Growth, Regulatory Relief, and Consumer Protection Act brings the first major changes to the banking regulations implementing Dodd-Frank. House Republicans had sought further regulatory reforms and reportedly backed S.2155 only after Senate leaders agreed to consider additional regulatory reform legislation that has been passed in the House. However, with the upcoming mid-term elections and the retirement of House Financial Services Committee Chairman Jeb Hensarling, the timing and chances of such legislation passing are uncertain.
Implementing and clarifying regulations will be required in a number of instances, including to establish the Community Bank Leverage Ratio, clarify application of EPS to domestic BHCs with total assets between $100 billion and $250 billion, and clarify any impact of the change to the SIFI assets threshold on other regulatory requirements such as the Comprehensive Capital Asset Review (CCAR), OCC Heightened Standards, and FDIC resolution recovery. Additionally, there continues to be some uncertainty around how the changes will apply to FBOs. The law does not directly address changes to the asset thresholds applicable to IHCs or the application of EPS based on an FBO’s U.S. non-branch assets. Further, the EPS asset threshold applicable to FBOs is set at $100 billion in total global consolidated assets in contrast to the domestic BHC SIFI threshold of $250 billion.