Press Release of Senator Crapo
Crapo's Regulatory Relief Bill Clears Senate
Financial services industry package clears major hurdle
Contact: Susan Wheeler
Washington, DC – Nearly two years of negotiations culminated today with unanimous Senate passage of legislation to provide regulatory improvements in the financial services industry. The measure, authored by Idaho Senator Mike Crapo, brings regulations up-to-date and in line with current technology and practices. S. 2856, The Financial Services Regulatory Relief Act of 2006, is a bipartisan bill that was unanimously approved by the Senate Banking Committee earlier this month. Crapo, a member of the Committee, has been the Senate leader in prompting reforms in the financial services industry that will ultimately improve customer services. In heralding the passage, Crapo said, “This bill is a balanced approach that carefully guards the safety and soundness of the financial services system, protects the interests of consumers, and reduces the burden of compliance with a host of laws that add unnecessary costs to the delivery of financial services to the American public. The regulatory burdens imposed on the financial services industry have grown over time. Some of these requirements have become obsolete or unnecessary. This legislation will lessen the regulatory burden, so banks, thrifts, and credit unions can better serve their customers and communities.”
Over the last two years, Crapo has led the Senate Banking Committee has held three hearings with numerous witnesses to move from the general objective of creating reform to specific proposals that achieve this result. Among the provisions included in the bill are:
1. Regulation B Relief. The Securities and Exchange Commission’s (SEC) proposed Regulation B has sparked broad opposition from Members of Congress, the Federal banking agencies, and the banking industry. If implemented in its current form, Regulation B would force banks and thrifts to push out traditional banking activities such as custodial and trust services to securities affiliates or discontinue such services altogether. The Financial Services Regulatory Relief Act of 2006 directs the SEC to consult with and seek the concurrence of the federal banking agencies in implementing the exceptions to the definition of broker under Section 201 of the Gramm-Leach-Bliley Act (“GLBA”). In addition, it specifies that no rules previously issued by the SEC on this subject, including Regulation B, shall have any force or effect. If any Federal banking agency objects to the SEC’s final rule, it may seek review of the rule in the D.C. Circuit Court, with deference granted to neither the SEC nor the Federal banking agency.
2. Development of Simplified Model Privacy Forms. This section directs regulatory agencies to develop a model privacy notice to satisfy the requirements of GLBA that is succinct, comprehensible and enables consumers to compare privacy practices among financial institutions. A financial institution that elects to provide the model form developed by the agencies would be deemed in compliance with the disclosures required under Section 503 of GLBA.
3. Collateral Modernization. This provision allows the Treasury Department to determine the types of securities that may be pledged in lieu of surety bonds and requires that the securities by valued at current market rates. This improved regulatory flexibility will allow banks to offer their customers options to meet pledging requirements, reduce administrative costs, and free up capital for more efficient uses such as lending, investments or dividends to shareholders.
In addition to these items, the bill also contains items that provide relief for community banks and credit unions. For community banks, these items include provisions that: • direct the Federal banking agencies to review the call report every five years to delete items that are no longer relevant; • increase asset-size eligibility for an 18-month exam cycle for well-rated, well-capitalized banks from $250 million to $500 million; • increase the exemption from the management interlocks restriction from $20 million in assets to $50 million; and • eliminate duplicative oversight and disparate treatment of savings associations under the federal securities laws by providing the same exemptions for savings associations that are currently available to banks with respect to investment adviser and broker-dealer activities. For credit unions, the bill includes provisions that: • allow credit unions to negotiate for nominal land rents on military installations; • increase the current 12¬-year maturity loan limit for credit unions to 15 years; • allow credit unions to provide basic check cashing and wire transfer services to anyone in their field of membership; and • update the definition of net worth so merging credit unions would not be penalized as a result of a pending accounting rule change.
The measure now goes to the House of Representatives for its concurrence or modification.
To view the Regulatory Relief Proposals click here.
To link to the Treasury Department's statement on this bill, go to: http://www.treasury.gov/press/releases/js4291.htm
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