| It may not happen often, but both credit union and community bank advocates cheered yesterday as the U.S. House of Representatives passed a Dodd-Frank regulatory relief package, sending the bill to President Donald Trump, who is expected to sign the legislation into law.
The Economic Growth, Regulatory Relief and Consumer Protection Act would raise the threshold for the size of an institution that regulators “deem too big to fail.” Currently, that threshold is $50 billion in assets; the new threshold would be $250 billion.
The proposal would also end stress testing entirely for banks with under $100 billion in assets, simplify capital calculations for community banks and provide some relief on the Volcker rule for banks under $10 billion in assets, among a host of other provisions.
“This hard-fought, long-awaited community bank regulatory relief legislation will put community banks in an enhanced position to foster local economic growth and prosperity. By unraveling some of the suffocating regulatory burdens community banks face, they are better able to unleash their full economic potential to the benefit of their customers and communities,” Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America, said in a statement. “ICBA thanks Congress for passing this crucial bipartisan bill, along with the thousands of community bankers, affiliated state associations and other industry allies who have fought for years for substantial regulatory relief that will strengthen economic growth, job creation and consumer protection in local communities.”
The bill also helps credit unions, mainly by ensuring that a one- to four-family dwelling that is not the primary residence of a member will not be considered a member business loan under the Federal Credit Union Act.
At other financial institutions these loans are classified as mortgages, but at credit unions, one- to four-family loans are currently classified as member business loans, which are capped at 12.25 percent of total assets.
“NAFCU and its members are incredibly appreciative that Congress recognized it was time to tackle one of the greatest challenges facing the credit union industry – unnecessary, burdensome regulations,” Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions, said in a said in a statement. “We thank [Senate Banking Committee] Chairman [Mike] Crapo, the Democratic and Republican cosponsors of this bill, and members of the Senate for crafting bipartisan legislation, and we thank [House Financial Services Committee] Chairman [Jeb] Hensarling and representatives on both sides of the aisle who voted in favor of it.”
