On May 24, President Trump signed into law the most significant banking legislation since the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") in 2010. The bill, titled the "Economic Growth, Regulatory Relief, and Consumer Protection Act," (the "Act") was approved by the U.S. House of Representatives on May 22, 2018. Identical legislation passed the U.S. Senate last March on a bipartisan basis.
As explained in a Cadwalader memorandum, the Act makes targeted changes to key areas of Dodd-Frank. The principal beneficiaries of the new law are smaller, non-complex banking organizations.
The memorandum summarizes changes in the following areas:
- Systemically Important Financial Institution (SIFI) thresholds;
- the Volcker Rule (it no longer applies to certain insured depository institutions);
- "off-ramp" relief for qualifying community banks;
- stress testing;
- risk committees and credit exposure reports;
- exam cycle and call report relief for smaller institutions;
- asset thresholds in the Small Bank Holding Company and Savings and Loan Holding Company Policy Statement;
- flexibility for federal thrifts to operate as national banks;
- the "ability to repay" requirement under the Truth in Lending Act (TILA) for smaller institutions;
- capital treatment for "high-volatility commercial real estate" (HVCRE) exposures;
- reciprocal deposits;
- Property Assessed Clean Energy (PACE) financing;
- protections for student borrowers;
- immunity from suits for disclosure of financial exploitation of senior citizens;
- mortgage relief;
- liquidity coverage ratio;
- custodial bank capital relief; and
- the Fair Credit Reporting Act.
In addition, the Act requires the Treasury Secretary to submit to Congress a report on the risk of cyber threats to U.S. financial institutions and capital markets.
The memorandum was authored by Cadwalader partners Scott Cammarn and Mark Chorazak.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
