Last month, the Treasury Department issued a 150-page report containing dozens of recommendations related to how Congress and regulatory agencies may streamline its regulation of the banking industry to better promote economic growth.
One such recommendation was that asset thresholds should be better tailored to deal with different business scenarios. Rob Nichols, president of the American Bankers Association (ABA), an organization which was an active participant in the Treasury’s study, stated: “We remain steadfast in our belief that arbitrary asset thresholds should not guide regulation. Rather, regulators should be empowered to ensure that rules are tailored to different risk profiles and business models.”
Another recommendation of the report was the simplification of the capital regime for community banks by exempting banks with less than $10 billion from Basel III. Further, the dubiously, problematic treatment of mortgage servicing assets and commercial real estate loans was also covered by the report. The report focused on several mortgage rules that the CFPB could address independently.
Another proposal was that all banks with less than $10 billion in assets should be exempt from the Volcker Rule, as the report attempted to tailor and limit the compliance impact for all banks.
Secretary of the Treasury, Steven Mnuchin, estimated that “70 to 80 percent” of the recommendations could be implemented by regulators immediately through their independent rulemaking authority. Other recommendations would require congressional action. Here is a list of some of the other recommendations:
- streamlining the FDIC de novo application process,
- easing appraisal requirements in rural areas,
- increasing the threshold for small creditor Qualified Mortgage loans,
- revisiting the volume and nature of supervisory Matters Requiring Attention,
- running the living will process on a two-year cycle,
- more clearly defining the Consumer Financial Protection Bureau’s UDAAP standard,
- making the CFPB “no-action” letter policy more useful, and
- revisiting the 2013 interagency leveraged lending guidance.
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