Roll Call
About The Keyvote

Economic Growth, Regulatory Relief, and Consumer Protection Act would provide targeted relief in the banking industry from onerous regulatory overreach into the financial sector created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly known as “Dodd-Frank.” Initially passed in response to the recession of 2008, Dodd-Frank created a series of reforms that were supposed to address the issues in the financial sector that had supposedly caused the recession, but instead created a climate of overregulation, authorized the creation of the Consumer Financial Protection Bureau (CFPB) with little to no oversight, and gave the Financial Stability Oversight Council (FSOC) the authority to label financial firms as too big to fail.

Dodd-Frank has actually been hurting community banks in favor of larger ones. Forced consolidation under Dodd-Frank has actually caused the number of community banks to shrink by roughly 14 percent between 2010 to 2014 while one in five U.S. banks have gone under (that’s 1,708 overall, or about one per business day) with few, if any, new banks being created since the law’s enactment to 2016. The Economic Growth, Regulatory Relief, and Consumer Protection Act is a step in the right direction, addressing many of the issues that Dodd-Frank has created. One such important issue it addresses, although not fully, is the “too big to fail” problem invented by Dodd-Frank. The bill would raise the asset threshold for systemically important financial institution (SIFI) designations from $50 billion to $250 billion. Raising the SIFI designation threshold has the much-needed effect of relieving up to 25 banks from the section of Dodd-Frank that authorizes excessively stringent regulations for those deemed “too big to fail.”

Furthermore, the bill would provide relief for institutions with less than $10 billion in assets to be exempt from a number of regulations, including allowing them to waive the ability-to-repay requirements for certain residential-mortgage loans, and to be exempt from the “Volcker Rule” which prohibits banking agencies from engaging in proprietary trading or entering into certain relationships with hedge funds and private-equity funds.

It also includes a myriad of other provisions for limited financial sector regulatory relief, such as from specified capital and leverage ratios, certain Home Mortgage Disclosure Act requirements, licensing process requirements under the SAFE for Mortgage Licensing Act, and certain escrow requirements as well.

On the whole, the bill is not perfect and Congress would do themselves well to expand the scope of reform and systematically overhaul the financial regulations on the banking industry entirely. However, the Economic Growth, Regulatory Relief, and Consumer Protection Act would provide significant and necessary relief to the financial sector, opening up the market to create new jobs and invite new business.