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News & Press: WIPP Legislative Updates

Extreme Makeover: Dodd-Frank Edition

Tuesday, May 26, 2015  
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Policy Briefing - Week of May 18

Extreme Makeover: Dodd-Frank Edition

The Senate Banking Committee passed the Financial Regulatory Improvement Act of 2015, a bill that revises provisions of the Dodd-Frank. The bill, passed by the Senate Banking Committee with only Republicans voting in favor, eases regulatory burdens on small financial institutions. The bill would increase Congressional oversight of government-sponsored enterprises (GSE), Freddie Mac and Fannie Mae.

The legislation raises the asset threshold for designating banks as systemically important financial institutions from $50 billion to $500 billion (i.e., the Federal Reserve would now evaluate bank holding companies with $500 billion rather than $50 billion). In addition, it revises the Federal Home Loan Bank Act definition of a “community financial institution” to include small credit unions – those with less than $1.1 billion in assets.

There seems to be consensus among Republicans and Democrats that community banks and credit unions should not have the same financial restrictions as bigger banks, a key component of WIPP’s advocacy agenda. Where there is disagreement, however, is whether or not the bill deregulates big banks and large financial institutions. Republicans claim that the bill provides regulatory relief to community and regional banks, while Democrats hold that, buried in the bill, there is too much deregulation of large financial institutions.

Democrats plan to release their own version of the Republican supported Financial Regulatory Improvement Act. While the Democrat’s version of the bill may help strike a deal between the two parties, it looks like a rocky road ahead for Dodd-Frank reform.

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