I recently had the pleasure of having dinner with Senator Richard Shelby (R-AL). We were in Dallas, preparing to watch our shared alma mater, the Crimson Tide of Alabama, take on the Wisconsin Badgers. It was a great honor to connect with a man who has meant so much to the state where I was born, and who continues to work hard for the banking industry.
Sen. Shelby is the current Chairman of the Banking, Housing and Urban Affairs Committee. His sponsored legislation, Senate Bill 1484 (the Financial Regulatory Improvement Act of 2015), was introduced on June 2, 2015, as an effort to reduce the regulatory burden on small and midsize banks. He understands their struggles with the increasing complexity of regulation and the rising cost of doing business, as well as the impact of those challenges on their ability to serve their communities effectively. The Senator described the Bill to community bankers earlier this year in Washington, DC:
“We are going to do what’s doable, because just to try and do nothing, that’s no good.
We want to give you some relief”
Understanding The Financial Regulatory Improvement Act of 2015
The Financial Regulatory Improvement Act of 2015 is one of the most noteworthy strides to change financial regulations since Dodd-Frank. Among other things, it was proposed to provide a safe harbor for banks under the qualified mortgage rules and increase scrutiny of the Federal Reserve Board of Governors. Some of the other notable proposed changes include:
- Increased supervision of the Federal Open Market Committee
- Safe harbor for banks from “qualified mortgage rules” by the Consumer Financial Protection Bureau, provided they hold the loans in portfolio and meet set criteria
- Regulatory easing for small and medium banks, including decreased oversight and less frequent regulatory exams, based on the size of the bank, the institution's international reach, and its overall complexity
- Privacy notice exception, amending the Gramm-Leach-Bliley Act requirement to provide annual written notice of a financial institution's privacy policy
- Potentially lower regulatory scrutiny for nonbank financial institutions currently designated as "systemically important" by the Financial Stability Oversight Council
- Requirement for the Federal Financial Institutions Examination Council to receive and investigate complaints about bank examiners
- Directs the CFPB to establish a process to designate “rural areas” for the purposes of consumer rules
- Allowance for certain privately insured credit unions to be members of a federal home loan bank
- Requirement for the National Credit Union Administration to hold public budget hearings
- Highly-rated community banks would be able to file shortened regulatory reports for two quarters of the year
- Banks with between $500 million and $1 billion in assets to go 18 months between regulatory exams
- Exception from the Volcker Rule for banks at or under $10 billion in assets
- An increase in the exemption from examination by the CFPB from $10 billion to $50 billion
- Requirements to study the impact of regulatory capital rules on mortgage servicing assets, and to consider Dodd-Frank as they review outdated or unnecessary regulation
According to the American Association of Bank Directors, the banking industry has broadly supported the Shelby regulatory relief legislation.
During our visit, Sen. Shelby shared stories and reminisced on his career in politics, his marriage of 55 years, and his beloved University of Alabama. As I listened to him share his different stories, I was struck by the importance of honor and the role it has played in his respect for others. It’s clear that little is as sacred to him as staying true to your word, and he is standing firm on behalf of banks.
As Jaret Seilberg, an analyst with Guggenheim Securities, states so eloquently, “Mr. Shelby knows how to pull every lever and push every button to get legislation enacted. You underestimate Richard Shelby at your own peril.”
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1 Senator Shelby's push for financial regulatory reform, Lexology
2 Here’s What’s in the Shelby Bill, Wall Street Journal
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