Politics & MoneyMortgage

Senate looks to pass sweeping changes to financial regulations

Bipartisan agreement would relieve small and regional lenders

Senators on both sides of the political spectrum came together to release an agreement Monday that would relieve small and regional lenders from many restrictions placed on larger institutions.

The Senate’s proposal would cut the number of banks subject to heightened oversight from the Federal Reserve from 38 to 12, according to an article by Andrew Ackerman, Ryan Tracy and Christina Rexrode for The Wall Street Journal. The legislation would raise the regulatory threshold to $250 billion in assets, up from the current $50 billion.

From the article:

The deal will “significantly improve our financial regulatory framework and foster economic growth by right-sizing regulation,” said Senate Banking Committee Chairman Michael Crapo (R., Idaho), who brokered the agreement between Republicans and a group of moderate Democrats.

Monday’s deal shows Republicans’ determination to ease regulations that they say constrain U.S. economic growth by limiting the capacity of banks and other businesses to serve customers and hire new workers. While it isn’t clear that any rule reduction will bolster the economy, efforts to scale back the 2010 Dodd Frank financial overhaul law and other policies amount to a bet that a freer environment will pave the way for increases in investment, spending and hiring.

The article explained that analysts said this could further increase merger and acquisition activity for business that previously didn’t want to pass the $50 billion line.

This legislation will be welcome news for credit unions and smaller to mid-sized banks across the nation who struggle to keep up with rising costs of regulations. Recently, the Credit Union National Association submitted a letter to the CFPB detailing each of the ways the agency’s rulemakings have affected America’s roughly 6,000 credit unions.

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