July 30, 2014

Is Bank Regulatory Relief Gaining Momentum?

Banks have been pleading with Congress for regulatory relief for as long as I can recall.  (For example, before the ink on the Dodd-Frank Act was dry, bankers were warning of the harmful effects of the cumulative regulatory burdens attributable to the Act.)  It appears bankers' advocacy efforts may now be closer to achieving results.
The House Financial Services Committee approved three regulatory reform bills this week.
  • The "Community Bank Mortgage Servicing Asset Capital Requirements Study Act of 2014," H.R. 4042, would delay the implementation of the Basel III rules that relate to capital requirements for mortgage servicing assets until a study is completed. 
  • The the "Access to Affordable Mortgages Act of 2014,'' H.R. 5148, would amend the Truth in Lending Act to exempt from certain appraisal standards certain "high-risk" mortgages of $250,000 or less if the loan stays on the balance sheet of the lender for three years. The act also would exempt certain individuals from penalties for failure to make reports regarding certain appraisers.
  • The "Regulation D Study Act," H.R. 3240, would require the Government Accountability Office (GAO) to study the impact of the Fed’s reserve requirements on depository institutions and consumers.
Other bills introduced in Congress would provide further relief if they can get the momentum to pass:
  • The "Portfolio Lending and Mortgage Access Act," H.R. 2673,  would amend the Truth in Lending Act by deeming any residential mortgage to be a "qualified mortgage" for as long as it remains on a bank's balance sheet.
  • The "Community Institution Mortgage Relief Act of 2014," H.R. 4521, would expand the CFPB’s small servicers exception to include servicers of 20,000 mortgage loans or fewer.  It would also exclude loans secured by a first lien on a dwelling that are held by creditors with assets of $10 billion or less.
  • The "Financial Regulatory Clarity Act of 2014," H.R. 4466, would require the federal banking agencies to consider whether any new regulation proposed is inconsistent with, or duplicative of, existing regulations. 
Whether any of these bills will make it to the Senate, much less the President's desk, is difficult to predict.

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