WASHINGTON — The top Republican on the Senate Banking Committee unveiled legislation Tuesday that would ease regulatory requirements on midsize banks and give lenders the option for greater freedom from mortgage lending rules.
The legislation by Alabama Sen. Richard Shelby would be the most ambitious rewrite of rules governing the financial services sector since Democrats passed the groundbreaking Dodd-Frank law when controlling Congress in 2010.
The bill would lift the asset threshold for banks considered “too big to fail” from $50 billion to $500 billion, giving regulators flexibility to exempt them from tougher capital requirements and stricter oversight. It also would give mortgage lenders flexibility to avoid lending standards put in place after the 2008 financial crisis.
The bill also would give lawmakers greater oversight powers over the Federal Reserve and force changes to the way it produces a key report on its monetary policy moves, while requiring it to be submitted to Congress each quarter instead of twice a year.
Sen. Sherrod Brown of Ohio, the top Democrat on the Banking panel, called Shelby’s bill “a sprawling industry wish list of Dodd-Frank rollbacks” and said that regulatory relief should be limited to credit unions and smaller community banks.
The Dodd-Frank law arose from the rubble of the financial crisis of 2008, sparked largely by the housing bubble and lax mortgage lending standards. Shelby’s measure would award banks a “safe harbor” from federal mortgage underwriting standards to allow them to issue more loans to borrowers who may not be able to prove their ability to repay the loan.
As for the Fed, the measure would award authorship of its monetary policy report to the larger Federal Open Market Committee instead of the seven-member board of governors.
