Head to Toe


Bank Regulation Rollback

This will be a short post today as it focuses on current events, specifically that a bill has been to sent to the president about rolling back regulations on banks.  This bill had bipartisan support in the Senate, but many on both sides are saying it didn’t go far enough, with Republicans saying they wanted more rollbacks and Democrats warning that the rollbacks set the stage for another financial collapse like in 2008.  All of this being said, let’s look at what the bill actually does

  • Smaller banks will no longer be under the same strict rules that very large banks are under, in an effort to increase their lending capability and stimulate the economy.  

  • The asset level for banks considered “too big to fail” will rise from $50 billion to $250 billion, meaning that only about a dozen banks now face the strictest regulation.  

  • Those no longer in that category will no longer have to hold the capital required to balance their balance sheets, and will no longer need to have plans in place to be safely dismantled if they fail.  

  • These smaller banks will now only have to take the Fed’s Bank Health Test periodically, instead of once a year.  

  • Banks with less than $10 billion in assets will be freed up to make more risky bets with money that is insured by taxpayers.

  • The credit reporting agencies Equifax, Transunion, and Experian will be required to freeze and unfreeze consumer credit reports for free in the wake of the massive data breach last year.  

Looking at these new regulations, it seems as though there will be a fair amount of slack given to banks going forward.  While being able to freeze and unfreeze credit reports for free is a good step forward, this is still a big win for the banking lobby.  This will be something to keep an eye on giving the mistakes that were made only a decade ago. If you have further questions or comments, post them below or send me an email.  

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