Banking and Finance Law Daily Senate votes to debate ‘regulatory relief’ bill; Brown notes CBO’s cost estimate
Tuesday, March 6, 2018

Senate votes to debate ‘regulatory relief’ bill; Brown notes CBO’s cost estimate

By Thomas G. Wolfe, J.D.

Approving a cloture motion, the U.S. Senate has voted to proceed with full debate on the "Economic Growth, Regulatory Relief, and Consumer Protection Act" (S. 2155), which would modify provisions of the Dodd-Frank Act and related laws governing financial services. The Senate voted 67 to 32 (with one senator not voting) to advance the proposed legislation. While the American Bankers Association applauded the Senate’s vote, Sen. Sherrod Brown (D-Ohio), Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, pointed to the Congressional Budget Office’s March 5, 2018, "Cost Estimate" report on S. 2155 and asserted that the "independent budget scorekeeper confirmed what we know—this bank giveaway bill will cost taxpayers."

American Bankers Association President and CEO Rob Nichols remarked that the ABA welcomed the Senate’s vote to begin debate on S. 2155. "This commonsense legislation will right-size financial rules and allow financial institutions to better serve their customers and communities."

S. 2155. Among other things, the proposed Economic Growth, Regulatory Relief, and Consumer Protection Act seeks to change the regulatory framework for large banks with assets over $50 billion and for small depository institutions with assets under $10 billion—generally, community banks. Truth in Lending Act amendments would allow community banks to waive "ability to repay" requirements for residential mortgage loans under certain circumstances, and Bank Holding Act amendments would exempt community banks from certain "Volcker Rule" requirements. In addition, the measure would make changes to regulations governing consumer mortgages, consumers’ access to credit, and credit reporting.

CBO report. In its recent "Cost Estimate" report, the CBO indicated that, if S. 2155 were to be enacted, it would "increase federal deficits by $671 million over the 2018-2027 period." According to the CBO, the $671 million federal deficit represents an increase in direct spending of $233 million and a decrease of $439 million in revenue. Also, implementation of S. 2155 would "cost $77 million over the 2018-2027 period."

Further, the CBO report notes that the estimate of the bill’s "budgetary effect is subject to considerable uncertainty, in part because it depends on the probability in any year that a systemically important financial institution (SIFI) will fail or that there will be a financial crisis." Moreover, while the CBO acknowledges that the probability that a SIFI will fail "is small under current law," the probability "would be slightly greater" under the proposed bill. Consequently, the CBO sought to develop estimates for S. 2155 that "are in the middle of the distribution of possible outcomes."

Brown’s response. In response to the CBO’s cost-estimate report on S. 2155, Brown asserted that the legislative measure would "increase the likelihood that a systemically important financial institution—a Wall Street or global megabank—will fail." Noting the burden to U.S. taxpayers for the CBO’s estimated increase to the federal deficit, Brown commented that "[h]ardworking Americans shouldn’t have to pay for favors to Wall Street, foreign megabanks and their lobbyists."

Companies: American Bankers Association

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