Magazine article American Banker

Crapo Bill Is Right to Help Less Risky Regional Banks

Magazine article American Banker

Crapo Bill Is Right to Help Less Risky Regional Banks

Article excerpt

Byline: Meghan Milloy

For the better part of a decade, the Dodd-Frank Reform and Consumer Protection Act has been law, bringing with it 147 new regulations that have resulted in $38.9 billion in regulatory costs and 82.9 million paperwork burden hours for our country's financial industry.

Now, 10 years after the height of the recession, Congress finally has prioritized reforming Dodd-Frank in an effort to curtail those unnecessary costs and support long-term growth.

The Economic Growth, Regulatory Relief and Recovery Act is the result of several months of bipartisan collaboration in the Senate Banking Committee, the majority of whose members (rightly) agree it is time for change. The bill differs from last year's Choice Act in the House, but the intent is the same: provide much-needed relief to financial institutions responsible for economic growth.

In particular, some regional and midsized banks stand to benefit from the proposed bill, which raises the asset threshold for stress tests and prudential standards from $50 billion to $250 billion. These institutions, which fill the gap between community banks and Wall Street banks, serve as the economic backbone for communities in every state by providing capital to consumers as well as the businesses driving job creation and growth; however, these community banks also fall above the $50 billion line, triggering crushing regulations.

Regulators, economists and members of Congress -- including Dodd-Frank's own Barney Frank -- have recognized that drawing a line at $50 billion was the wrong approach. This mistake is one reason why, eight years after Dodd-Frank became law, correcting the most obvious flaws of the law is so important.

While some say the bill goes too far, the data present a different story: Midsized and regional banks, the primary beneficiaries of this bill, present little risk to the financial system, yet are saddled with burdensome and unnecessary compliance costs. …

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