The Economic Growth, Regulatory Relief and Consumer Protection Act

The Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) has now been signed by the President on Thursday May 24, 2018. The act will provide regulatory relief for financial service companies that have been subject to compliance challenges since the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

Key provisions of this legislation include:

  • Qualified mortgages – This bill amends the Truth in Lending Act (TILA) to allow a depository institution or credit union with assets less than $10 billion to forgo certain ability-to-pay requirements regarding residential mortgage loans. Those requirements are waived if a loan is deemed a qualified mortgage. (Sec. 101)
  • HMDA disclosure relief – The bill amends the Home Mortgage Disclosure Act of 1975 to exempt from specified public disclosure requirements depository institutions and credit unions that originate fewer than a specified number of closed-end mortgages or open-end lines of credit. (Sec. 104)
  • Simplifying capital calculations – Federal banking agencies must develop a specified Community Bank Leverage Ratio (the ratio of a bank’s equity capital to its consolidated assets) for banks with assets of less than $10 billion. Such banks that exceed this ratio shall be deemed to be in compliance with all other capital and leverage requirements. The agencies are directed to establish a leverage ratio of 8-10 percent. (Sec. 201)
  • Volcker Rule – Banks with total assets less than $10 billion and trading assets and liabilities not more than 5% of total assets are exempt from the Volcker Rule. (Sec. 204)
  • Small bank holding company policy statement – The act requires the Federal Reserve Board to raise the consolidated asset threshold in its Small Bank Holding Company and Savings and Loan Holding Company Policy Statement from $1 billion to $3 billion. (Sec. 207)
  • Examination cycle – The act allows for well-managed and well capitalized banks with up to $3 billion in assets to have full-scope, on-site examinations every 18 months, rather than every 12 months. Under current law, only banks with up to $1 billion in assets may qualify for the 18 month examination cycle. (Sec. 210)
  • High volatility CRE – This bill excludes lower-risk CRE loans from the HVCRE capital rules. (Sec. 214)

Timeline for Action

Some of the changes are effective upon enactment (qualified mortgages, Volcker Rule, examination cycle). Other sections of the act (capital simplification, small bank holding company policy statement, HVCRE) have no time frame as they require certain agencies to take action prior to implementation.

Please see the Links  to ABA’s Resources

The webinar is available for download on ABA’s dedicated S. 2155 resource page. Other resources include an executive summary of the bill, highlights and testimonials and an implementation guide.

We Can Help

Please contact your Elliott Davis team member or Barbara Rushing with questions or assistance in interpreting the guidance.