Implementation of Financial Services Regulatory Reform Legislation: Financial Regulators Discuss Implementation of the “Economic Growth, Regulatory Relief, and Consumer Protection Act”

Sullivan & Cromwell LLP - October 9, 2018

On October 2, the Senate Banking Committee held a hearing on the implementation of the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Act”), which was enacted earlier this year. The hearing featured testimony by FDIC Chairman Jelena McWilliams, Federal Reserve Board Vice Chairman for Supervision Randy Quarles, National Credit Union Administration Chairman Mark McWatters, and Comptroller of the Currency Joseph Otting.

At the hearing, the regulators discussed their progress and priorities in implementing several modifications that the Act made to the post-crisis regulatory framework. These modifications, some of which are already in effect and others of which remain to be completed, should provide meaningful regulatory relief for smaller and certain regional banking organizations. A number of other regulatory and supervisory issues were also discussed, including proposed reforms to the regulations implementing the Community Reinvestment Act (“CRA”), the use and role of supervisory guidance, the Congressional Review Act, the pending interagency proposal to modify the regulations implementing the Volcker Rule, and the negotiation of international insurance standards.

Vice Chairman Quarles focused his testimony on risk-based tailoring by the Federal Reserve of the supervision and regulation of bank holding companies (“BHCs”) with greater than $100 billion in total consolidated assets. We discuss this aspect of the hearing—which related primarily to the Act’s increase in the statutory asset threshold (often referred to as the “SIFI” threshold) above which the Federal Reserve is required to apply the “enhanced prudential standards” in Section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”)—in a separate Memorandum to Clients that was also published today.