Since President Donald Trump took office, the finance and corporate world had been anticipating relief on banking regulations that were instituted after the 2008 financial meltdown. Late last month, the president signed a bill that will roll back many of those regulations for smaller financial institutions.
On May 24, Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act, which removed a range of requirements and restrictions for banks, particularly those below certain size thresholds. The bill targets reforms instituted by the Dodd-Frank Act of 2010 such as the Volcker Rule that restricted entities from risky trading. While its amendments are less drastic than those proposed by other bills that have been introduced, the financial industry is seeing the new bill as a first step toward additional Dodd-Frank rollback.
The new bill installs a range of tweaks, from easing mortgage-lending requirements on community banks to exempting smaller banks from certain regulatory oversight in their trading and lending practices. After Dodd-Frank was enacted, banking organizations with at least $50 billion in assets were subject to law’s weightiest obligations. These “enhanced prudential standards” held banks to strict requirements in liquidity, stress testing and resolution planning. The new bill raises that threshold to banks with at least $250 billion assets.