Regulation

Fed Mulls Big Bank Rules Change On Oct. 31

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The U.S. Federal Reserve will consider some deregulation for all but the nation’s largest banks at a board meeting at the end of this month.

According to Reuters, the central bank’s board will meet on October 31 to consider a proposal to implement several provisions of the rewrite of the 2010 Dodd-Frank law, which Congress passed in May. One of those changes includes easing oversight of banks with $100 billion to $250 billion in assets.

Randal Quarles, the Fed's Vice Chairman for Supervision, had revealed earlier this month that the package could include eased capital and liquidity rules for smaller banks, as well as require them to be subjected to a “stress test” of their operations less often than they had been in the wake of the financial crisis.

He added that the Fed would also consider modifying some of the rules for banks such as Capital One, PNC and US Bancorp, which are above the $250 billion threshold but smaller than the largest global banks.

The rewrite of Dodd-Frank raised the threshold for banks considered “systemically risky” and subject to stricter oversight from $50 billion to $250 billion. Banks between $50 billion and $100 billion in assets were immediately freed from the tighter regulation when it was passed.

And earlier this month, President Loretta Mester of the Cleveland Federal Reserve urged an overhaul and update of decades-old regulations on small business banking that would make a significantly large impact on the nation’s community banks.

The remarks highlighted the Fed’s support of White House interest in exploring regulatory updates to support small businesses and increase SMB lending. While current regulations under the Community Reinvestment Act (CRA) have boosted small business lending in poorer communities in the country, regulations must reflect modern-day technological advancements and banking practices, Mester said. She added that banking practices and FinServ technologies have now forced officials to reexamine the rules, which are already being examined by the U.S. Treasury Department.

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