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Thanksgiving: Regulatory Relief and Tax Reform

November 21, 2017

Authors

Robert Klingler

Thanksgiving: Regulatory Relief and Tax Reform

November 21, 2017

by: Robert Klingler

the-bank-accountOn the latest episode of The Bank Account, Jonathan and I discuss two business reasons for bankers to be thankful this holiday season, the Senate’s proposed regulatory relief legislation and legislative efforts for tax reform.

The Senate Banking Committee has released the text of proposed legislation providing real regulatory relief to community banks.  With ten Republican co-sponsors and nine Democratic co-sponsors, the measure would appear to have better odds than prior regulatory reform actions.   That said, no action is expected until sometime in 2018, and we’re still a long way away from adopted legislation.  The proposed legislation provides for significant regulatory relief for community banks, including:

  • a regulatory “express lane” for community banks with sufficient leverage capital
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HVCRE Gets a Reboot

September 27, 2017

Authors

Jerry Blanchard

HVCRE Gets a Reboot

September 27, 2017

by: Jerry Blanchard

As we mentioned just a couple of weeks ago, the federal banking regulators have taken aim at the risk weighting rules for High Volatility Commercial Real Estate (“HVCRE”) loans that went into effect back in 2015. In a proposal published on September 27, 2017, the regulators seek to simplify the approach in several ways. First, the existing HVCRE definition in the standardized approach would be replaced with a simpler definition, called HVADC, which would apply to credit facilities that primarily finance or refinance ADC activities. Second, an HVADC exposure would receive a 130 percent risk weight.as opposed to the 150% risk weight for HVCRE exposure under the existing rule. The tradeoff though is that HVADC would apply to a much broader set of loans. For example, as compared to the

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FRB Lifts Threshold for Financial Stability Review

April 11, 2017

Authors

Lyn Schroeder

FRB Lifts Threshold for Financial Stability Review

April 11, 2017

by: Lyn Schroeder

In its March 2017 approval of People United Financial, Inc.’s merger with Suffolk Bancorp (the “Peoples United Order”), the Federal Reserve Board eased the approval criteria for certain smaller bank merger transactions by expanding its presumption regarding proposals that do not raise material financial stability concerns and providing for approval under delegated authority for such proposals.  The Dodd-Frank Act amended Section 3 of the Bank Holding Company Act to require the Federal Reserve to consider the “extent to which a proposed acquisition, merger, or consolidation would result in greater or more concentrated risks to the stability of the United States banking or financial system.”

In a 2012 approval order, the Federal Reserve established a presumption that a proposal that involves an acquisition of less than $2 billion in assets, that results in a

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Dodd-Frank Act Reforms

March 23, 2017

Authors

Robert Klingler

Dodd-Frank Act Reforms

March 23, 2017

by: Robert Klingler

Much of the discussion we’re having with our clients and other professionals relates to the prospects for financial regulatory reform.  To that end, and looking at it from the political rather than industry perspective, Bryan Cave’s Public Policy and Government Affairs Team has put together a brief client alert examining the political, legislative and regulatory issues currently under consideration.

In his first weeks in office, President Trump has taken steps to undo or alter major components of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). These include delaying implementation of the “Fiduciary Rule,” which regulates the relationship between investors and their financial advisors, directing the Treasury Secretary to review the Dodd-Frank Act in its entirety, and signing a resolution passed by Congress that repeals a Dodd-Frank regulation on disclosures of overseas

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Trump May Not be the Only Catalyst for Administrative Reform

March 21, 2017

Authors

Crystal Homa

Trump May Not be the Only Catalyst for Administrative Reform

March 21, 2017

by: Crystal Homa

In the past few months, there has been a lot of speculation regarding the future of many administrative agencies under Trump’s administration. However, two current cases pending in the D.C. Circuit have the potential to have a dramatic impact on administrative agencies and past and present regulatory enforcement actions by such agencies.

In Lucia v. SEC, the SEC brought claims against Lucia for misleading advertising in violation of the Investment Advisers Act of 1940. The enforcement action was initially resolved by an administrative law judge (ALJ); however Luica was later granted a petition for review based on an argument that the administrative hearing was unconstitutional because the ALJ was unconstitutionally appointed. The issue made it up to the U.S. Court of Appeals for the D.C. Circuit who recently held that the ALJ

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Impact of Proposed “Regulatory Off-Ramp” for Community Banks

February 15, 2017

Authors

Robert Klingler

Impact of Proposed “Regulatory Off-Ramp” for Community Banks

February 15, 2017

by: Robert Klingler

A key component of the proposed roadmap for Republican efforts to provide regulatory relief is based on reduced regulatory burdens in exchange for holding higher capital levels.  Specifically, Title I of the proposed Financial Choice Act, as modified by Representative Hensarling’s “Choice Act 2.0 Changes” memo of February 7, 2017, proposes to provide significant regulatory relief for institutions that maintain an average leverage ratio of at least 10 percent.

The principal concepts of this “regulatory off-ramp” have, so far, remained relatively constant since first published by the House Financial Services Committee in June of 2016; any institution that elects to maintain elevated capital ratios (set at a 10% leverage ratio) would enjoy exemptions from the need to comply with certain other bank regulatory requirements.

Choice 2.0

In February 2017, Jeb Hensarling, Chairman

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Core Principles for Financial Regulation

February 7, 2017

Authors

Robert Klingler

Core Principles for Financial Regulation

February 7, 2017

by: Robert Klingler

On February 3, 2017, President Trump issued an executive order setting forth his administration’s core principles for the regulation of the U.S. financial system.  While generally touted as the administration’s first affirmative steps to dismantle the Dodd-Frank Act, the executive order actually does little to implement any immediate change but says a lot about the overall framework by which the Trump Administration intends to approach financial regulation.

In addition to standard executive order boilerplate, the executive order sets forth two specific actions.  First, it establishes the “principles of regulation” that the administration will look at in evaluating regulations.

Section 1. Policy. It shall be the policy of my Administration to regulate the United States financial system in a manner consistent with the following principles of regulation, which shall be known as the Core

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The Economist Frames the Argument Against Excessive Bank Regulation (somewhat unintentionally)

April 1, 2016

Authors

Jonathan Hightower

The Economist Frames the Argument Against Excessive Bank Regulation (somewhat unintentionally)

April 1, 2016

by: Jonathan Hightower

On March 26, 2016, The Economist published an article entitled “The Problem with Profits.” That article discussed the high profitability of U.S. firms and why that seemingly positive fact is actually harmful to the overall economy, mainly because those profits are not being distributed for spending by shareholders or reinvested in business growth. As a result, the economy shrinks as resources flow to these firms and remain on their balance sheets. The focus of the article was a call for increased competition, but we believe we should focus on other conclusions.

While the article gives a tip of the cap to the impact of regulation generally and bank regulation specifically, banks represent the poster child for the negative impacts of limiting the ability of domestic firms to reinvest, an impact that is not directly reflected on balance sheets or income statements.

Since the onset of “new and improved” regulation

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Regulatory Cleanup in 2015: What Bank Regulations Most Need Reform?

April 22, 2015

Authors

Dan Wheeler

Regulatory Cleanup in 2015: What Bank Regulations Most Need Reform?

April 22, 2015

by: Dan Wheeler

Right now, the federal banking agencies (not including the CFPB) are engaging in a legally-required review process to examine what regulations are outdated, outmoded or unduly burdensome.  Accordingly, the time is especially right for community banks to voice their concerns about their regulatory environment.  Because of their lingering political unpopularity, many banks believe they have little or no leverage to seek reform of counterproductive regulations and improper regulatory enforcement tactics.  But, by speaking with a consistent and united voice and by dealing with facts (in stark contrast to partisan attacks on banks), community banks can achieve real reform.

Here are suggestions for areas in which we can focus our reform efforts, beginning with the most urgent.

1.    Seek genuine “right-sized” bank regulation.  Community banks’ efficiency ratios severely lag those of large banks because the cost of regulation disproportionately burdens community banks.  There is no serious dispute about this by scholars

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CFPB Seeks Suggestions for Streamlining Inherited Regs

January 10, 2012

Authors

Bryan Cave

CFPB Seeks Suggestions for Streamlining Inherited Regs

January 10, 2012

by: Bryan Cave

The CFPB is requesting suggestions for streamlining the regulations it has inherited from other agencies pursuant to the Dodd-Frank Act.

In particular, the bureau is asking the public to identify provisions of such regulations that it should make the highest priority for updating, modifying or eliminating because they are outdated, unduly burdensome or unnecessary, including:

  • Certain definitions in Reg E, Reg P, Reg Z
  • Annual privacy notices under Reg P
  • ATM fee disclosures under Reg E
  • Coverage and scope of Reg Z
  • Electronic disclosures required under Reg E and Reg Z

Publication of the CFPB’s notice in the Federal Register is available at http://www.gpo.gov/fdsys/pkg/FR-2011-12-05/pdf/2011-31030.pdf. Comments are due by March 5, 2012; commenters will have until April 3, 2012, to respond to other comments.

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