S 2155: Large Banks
Put together, S 2155 was meant to rollback stringent provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Act mainly offers regulatory relief to banks, relax capital
formation regulations, relax mortgage lending rules, and improve consumer protections related to credit reporting among other issues. Below is a detailed overview of how S 2155 affects large banks in the US.
- The S 2155 Act 'deregulates' 25 of the largest 38 banks in the United States in what critics say would roll back key measures put in place in the aftermath of the 2007-2008 financial crisis.
- The Economic Growth, Regulatory Relief, and Consumer Protection Act, or S. 2155, changes the criteria used to determine which banks are subject to enhanced regulations, releasing some banks from the regime. Banks previously designated as globally systemically important banks as well as banks with over $250 billion in assets would still be subjected to enhanced prudential regulations.
- The Act scaled down key regulations for banks with between $100 billion and $250 billion in assets. Under the new regulations, these banks are subject to only supervisory stress tests.
- In addition, the Federal Reserve is mandated to apply other individual enhanced prudential regulations to banks with between $100 billion and $250 billion in assets.
- Banks with between $50 billion and $100 billion in assets are no longer to enhanced regulation. However, they are required to comply with the risk committee requirement.
- S 2155 also relaxed leverage requirements for large custody banks.
- The new rules also allowed large banks to use certain municipal bonds to meet their liquidity requirements.