Financial Services Regulatory Reform Legislation: Senate Panel Approves Bipartisan Regulatory Reform Bill

Sullivan & Cromwell LLP - December 7, 2017

On December 5, the Senate Banking Committee approved, on a vote of 16 to 7, the “Economic Growth, Regulatory Relief, and Consumer Protection Act” (the “Senate Bill”). The legislation, as amended to a limited extent during the Committee markup, is very similar to the as-introduced version of the bill that we summarized in our Client Memorandum of November 20, 2017. The Senate Bill would revise various post-crisis regulatory requirements, including a number of amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), and provide other targeted regulatory relief to certain financial institutions and new consumer protections, such as credit report fraud alerts and free annual security freezes from credit reporting agencies.

Most significantly, the Senate Bill would increase, from $50 billion to $250 billion, the Dodd-Frank asset threshold for automatic “SIFI” regulation of bank holding companies (“BHCs”), exempt from the Volcker Rule insured depository institutions with less than $10 billion in consolidated assets and lower levels of trading assets and liabilities, and require certain modifications to the banking agencies’ Liquidity Coverage Ratio requirements. The Committee adopted some notable modifications to the as-introduced text of the Senate Bill, including:

  • new “transparency” requirements with respect to U.S. participation in the development of certain international insurance-related standards;
  • certain modifications to the banking agencies’ Supplementary Leverage Ratio (“SLR”) requirements;
  • modified amendments to the Dodd-Frank company-run stress testing requirements and Volcker Rule exemption for small financial institutions; and
  • a provision designed to facilitate online banking.