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Senate Passes Banking Bill Providing Dodd-Frank Relief

The U.S. Senate on March 14 passed S.2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act), by a vote of 67 to 31. Although the Act would not make the sweeping changes to the Dodd-Frank Act found in the Financial CHOICE Act of 2017 (CHOICE Act), it, nevertheless, would provide financial institutions welcome relief from a number of specific Dodd-Frank provisions.

Representative Jeb Hensarling, Chairman of the House Financial Services Committee, has indicated that further negotiations between the House and Senate must take place before the House votes on the Act. House Speaker Paul Ryan has taken a more conciliatory tone, commenting on the need for common sense bipartisan solutions in the final bill. As a result, while a final bill can be expected to include changes to the Act, it is unclear how substantial those changes will be. Assuming a final bill signed by President Donald J. Trump retains many, if not most, of the Act's provisions, the Act should positively impact both smaller and larger financial institutions. The Act would make a number of changes to provisions of Dodd-Frank and other federal laws regarding consumer mortgages, credit reporting, and loans to veterans and students.

The Act would also reduce the regulatory burdens on financial institutions—particularly financial institutions with total assets of less than $10 billion. Bank holding companies with up to $3 billion in total assets would be permitted to comply with less restrictive debt-to-equity limitations instead of consolidated capital requirements. This change should promote growth by smaller bank holding companies, organically or by acquisition. Larger institutions should benefit from the higher asset thresholds that would apply to systemically important banks subject to enhanced prudential standards. The higher thresholds may lead to increased merger activity between and among regional and super regional banks.

Although the banking industry can be expected to view the Act positively should it become law, it falls short of the CHOICE Act in several important respects. The CHOICE Act would:

  • reduce regulatory burdens on institutions based on capital levels irrespective of asset size

  • reduce the Financial Stability Oversight Council's powers

  • repeal Dodd–Frank's orderly liquidation authority, and

  • scale back the CFPB's powers.

Copyright © by Ballard Spahr LLP

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About this Author

Kaplinksy, partner, New York, finance
Partner

Alan S. Kaplinsky is Co-Practice Leader of the firm's Consumer Financial Services Group, which has more than 115 lawyers. Mr. Kaplinsky devotes his practice exclusively to counseling financial institutions on bank regulatory and transactional matters, particularly consumer financial services law, and defending financial institutions that have been sued by consumers in individual and class action lawsuits and by government enforcement agencies. Visit Mr. Kaplinsky's profile in Wikipedia.

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Richard J. Andreano, Jr. , Ballard Spahr Law Frim, Washington DC,  Business and Finance attorney, Mortgage Banking, Consumer Financial Services, Fair Lending

Richard J. Andreano, Jr., is the Practice Leader of Ballard Spahr's Mortgage Banking Group. He has devoted 30 years of practice to financial services, mortgage banking, and consumer finance law.

Mr. Andreano advises banks, lenders, brokers, home builders, title companies, real estate professionals, and other settlement providers on regulatory compliance and transactional matters, Federal Housing Administration (FHA) issues, and administrative examinations, enforcement actions and investigations. He also works with litigation counsel on devising strategies for defense of class action and other lawsuits involving regulatory claims. Mr. Andreano is the principal contact for the firm in its role as federal consumer regulatory counsel to the Real Estate Services Providers Council, Inc. (RESPRO).

Mr. Andreano counsels settlement service providers on issues concerning the Dodd-Frank Wall Street Reform and Consumer Protection Act, Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act (TILA), Equal Credit Opportunity Act (ECOA), Fair Housing Act, Fair Credit Reporting Act (including FACTA), Home Mortgage Disclosure Act (HMDA), and Gramm-Leach-Bliley Act. He assists clients with preparing for and handling CFPB examinations and with a variety of regulatory issues, including issues relating to the implementation and compliance with Consumer Financial Protection Bureau mortgage rules, origination and servicing practices, loan originator and branch manager compensation, disclosures, marketing services and similar agreements, affiliated business arrangements and service arrangements. Mr. Andreano previously served as an analyst for the National Association of Securities Dealers.

Mr. Andreano is author of the MBA Compliance Essentials Loan Originator Compensation Rule Resource Guide and co-author of the MBA Compliance Essentials TILA RESPA Integrated Disclosure (TRID) Resource Guide. He is Editor-in-Chief of Mortgage Finance Regulation Answer Book 2011-2012, published by the Practising Law Institute; author of its chapters on the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Home Mortgage Disclosure Act, and the Real Estate Settlement Procedures Act; and co-author of its Equal Credit Opportunity Act and Truth in Lending Act chapters.

202.661.2271
Scott Coleman, Finance Attorney, Minneapolis, Mergers, Stock Transactions, Branch Purpose
Partner

For 25 years, Scott Coleman has represented banks and bank holding companies in connection with mergers, stock purchase transactions, branch purchase and assumption transactions, capital raising, corporate restructuring, branching, non-bank acquisitions, changes in bank control, and charter conversions. He has also represented organizers seeking to form bank holding-companies, apply for deposit insurance, and charter new depository institutions. Scott has significant experience in a wide range of regulatory matters, including Reg O, Reg W, Reg Y, interstate banking, and branching, lending...

612.371.2428
Kim Phan, Ballard Spahr Law Firm, Washington DC, Business and Finance Law Attorney
Of Counsel

Kim Phan writes and speaks frequently about privacy and data security issues for a variety of industries, including consumer financial services, retail, hospitality, higher education, and utilities. Ms. Phan counsels clients on privacy and data security law in areas including the Gramm-Leach-Bliley Act (GLBA), the Fair Credit Reporting Act (FCRA), the Telephone Consumer Protection Act (TCPA), and other federal and state privacy and data security statutes and regulations. Her work in this area encompasses strategic planning and guidance for companies to incorporate...

202-661-2286
Culhane, Ballard, Partner
Partner

John L. Culhane, Jr., is known for his work advising on interstate direct and indirect consumer and residential mortgage loan and leasing programs, through both traditional brick-and-mortar facilities and e-commerce. Before joining Ballard Spahr, Mr. Culhane was associate counsel with Mellon Bank, N.A.; associate counsel with Bank of America NT&SA; and senior attorney (section chief) with the National Credit Union Administration, the federal agency regulating federal credit unions.

Mr. Culhane addresses issues involving licensing,...

215-864-8535