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In the wake of new banking legislation—S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act—many banks are seeking guidance on how the new law will affect them. The Independent Community Bankers of America recently published a comprehensive report on S. 2155 and what it means for banks.

The legislative changes in S. 2155 include the following:

Simplification of capital rules

  • Qualifying banks (those (1) with assets less than $10 billion and (2) that are well capitalized) are now, effectively, exempt from risk-based capital requirements.
  • The asset eligibility threshold for the Fed’s Small Bank Holding Company Policy Statement was raised to $3 billion.
  • Easing of Basel III HVCRE risk weights, for those banks still subject to risk-based capital rules.
  • Banks approaching the systematically important financial institution (SIFI) threshold are less vulnerable to Dodd-Frank enhanced prudential standards. 

Easing of mortgage lending requirements –

  • Automatic “qualified mortgage” status for certain mortgages at banks with assets less than $10 billion.
  • Exemption from Truth in Lending Act escrow requirements for banks with assets less than $10 billion that make fewer than 1,000 first lien mortgages annually on principal dwellings.
  • Exemption from Dodd-Frank HMDA data fields for certain lenders with a satisfactory CRA rating.
  • Exemption from appraisal requirements for rural portfolio loans of less than $400,000.
  • Elimination of TRID waiting period.

Decrease in reporting and examination requirements –

  • Increase in the 18-month exam cycle asset threshold (from $1 billion to $3 billion).
  • New requirement for agencies to create short form call reports.
  • Elimination of mandatory stress testing for banks with $10-$50 billion in assets.
  • Elimination of requirement for risk committees for banks with $10-$50 billion in assets.

Increase in flexibility for mutual banks –

  • Eliminates requirement for federal savings institutions with $20 billion or less in assets to operate with national bank powers.

Addition of miscellaneous relief items –

  • Exempts qualifying banks with less than $10 billion in assets from the Volcker Rule.
  • Eases regulations on what constitutes a reciprocal deposit.
  • Changes classification of investment-grade municipal bonds (which may improve their liquidity).

To read the article in full, visit the Independent Community Bankers of America homepage.