Washington: US senators agreed Monday on legislation to reduce the regulatory burden on small banks, reforming rules established in the wake of the 2008 financial crisis, while also improving protections for consumers.
In a show of bipartisanship rarely seen in the first year of President Donald Trump's administration, Republicans and Democrats on the Senate Banking Committee clinched a deal to roll back rules that subject small community banks to the same standards as huge financial institutions.
"The bipartisan proposals on which we have agreed will significantly improve our financial regulatory framework and foster economic growth by right-sizing regulation, particularly for smaller financial institutions and community banks," Committee Chairman Mike Crapo, a Republican from Idaho, said in a statement.
The deal won the support of nine Democrats on the committee. The House passed its version of the regulatory reform in June, but it had no Democratic support. Senator Mark Warner said the reform provides "commonsense fixes that will provide tangible relief to the community banks that are lifelines for smaller and rural communities" while keeping tougher rules for large banks.
"The goal is simple: to help Main Street by rolling back unnecessary and burdensome regulations on credit unions and small community banks while ensuring that large Wall Street banks remain subject to the rules I helped put in place after the financial crisis to prevent another meltdown," the Virginia Democrat added.
The Senate bill raises the size threshold for banks required to follow the more onerous and costly regulatory steps to $100 billion from $50 billion.
Those banks with assets of $100-$250 billion will be exempt from the regulations for 18 months.
The American Bankers Association said it supports the proposed legislation as "an important first step" in adjusting regulations.
However, ABA president Rob Nichols said the association opposes "arbitrary asset threshold" as the basis for regulation, and instead urges authorities to use "a bank's risk profile and business model."
But the changes "will at least spare more banks from regulatory requirements that made little sense for institutions of their size," Nichols added.
The legislation also includes consumer protections, including fraud alerts for victims of identity theft for one year without charge from credit bureaus, and protections for veterans facing medical debt or seniors being exploited.
The measure also would require a report by the Securities and Exchange Commission, the US stock market regulator, on the risks and benefits of algorithmic trading, the high-speed trading conducted by computers.