Regulatory reform

The president of the St. Louis Fed said that regulators should go back to the pre-Dodd Frank framework for small banks, while warning about changes to the system as fintechs expand their presence.

The current regulatory focus drives the growth of ever-larger, harder-to-manage and harder-to-regulate megabanks, while community banks have been left to be picked up by acquirers.

Senate lawmakers will soon introduce a bill that could more than quadruple the current $50 billion threshold to be considered a systemically important bank, National Economic Council Director Gary Cohn said Monday.

Credit union trade associations commended the committee’s work that was the result of a two-day mark-up

The bills were individual pieces of the larger Financial Choice Act, including measures to raise the systemic threshold for banks and raise the threshold for banks subject to CFPB supervision.

The Consumer Financial Protection Bureau was created in part to ensure that nonbanks are subject to federal oversight, but the fact is that 99% of banks are exempt from CFPB supervision.

Cynthia Blankenship, an executive at Bank of the West in Grapevine, Texas, has been a regular in Washington for years fighting for regulatory changes. She is encouraging other bankers to do likewise.

Though FHFA Director Mel Watt stopped short of saying he would break with a Treasury agreement that forces all profits of the GSEs to go to the government, he emphasized that it couldn’t continue indefinitely.

The week of Oct. 2 is shaping up to be a significant one for the financial services industry on Capitol Hill, as lawmakers grill the top executives of Equifax and Wells Fargo, as well as the top regulator of Fannie Mae and Freddie Mac.

Under the bill, regional banks may eventually be able to shed the systemically important financial institution designation that subjects those with more than $50 billion in assets to tougher regulatory requirements.