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1 [1] (May 30, 2024)

handle is hein.crs/govepen0001 and id is 1 raw text is: Congressional Research Service informing the legislative debate since 1914 0 May 30, 2024 Bank Resilience and Regulatory Improvement Act (H.R. 8337) On May 16, 2024, the House Financial Services Committee ordered an amendment in the nature of a substitute to H.R. 8337 to be reported. The bill would provide various forms of regulatory relief to banks, as discussed in this In Focus. In addition, the bill has two sections related to issues raised by the failure of three large banks in 2023. Higher Regulatory Thresho s Some bank regulations are tailored, with small banks either exempted from regulations or allowed to comply with streamlined versions of regulations. Congress has debated what size is appropriate for certain regulations to apply to banks, with various thresholds currently used. Figure I. Depository Institutions by Asset Size, 2023 Holl 0 2,00 3 4000 Source: CRS calculations based on data from Federal Reserve, Federal Deposit Insurance Corporation, and National Credit Union Administration. Notes: Banks includes commercial banks and savings associations. Holding companies includes bank holding companies and thrift holding companies. Figure does not include foreign banking organizations. Section 101 of H.R. 8337 would raise a number of these thresholds from $10 billion to $50 billion in assets. Banks with assets between $10 billion and $50 billion would now, provided they meet other qualifying criteria, be * exempt from supervision for consumer compliance by the Consumer Financial Protection Bureau; * exempt from the Durbin Amendment, which caps debit card swipe fees; * exempt from the Volcker Rule, which prohibits banks from proprietary trading and sponsoring private funds; * eligible for the Portfolio Qualified Mortgage (QM) compliance option; * eligible for the Community Bank Leverage Ratio (CBLR), which allows banks to elect to be exempted from risk- weighted capital requirements. Section 601 would raise the asset threshold from $3 billion to $10 billion for the Small Bank Holding Company Policy Statement (SBHCPS), which allows eligible bank holding companies below the threshold to take on more debt to complete mergers and exempts holding companies from Basel III requirements. The current thresholds for the Volcker Rule, Portfolio QM, CBLR, and SBHCPS were set by P.L. 115-174 in 2018. Figure 1 shows how many institutions are below the $10 billion in assets threshold and how many fall between $10 billion and $50 billion. (Whether a bank, holding company, or credit union would be exempted depends on the provision and whether the institution meets other qualifying criteria.) For more information, see CRS Report R46779, Over the Line: Asset Thresholds in Bank Regulation. Mergers The bank merger process has been criticized by some as too lax and by others as too slow and vulnerable to interference. Because the merger application process is iterative, it can be lengthy, particularly for large institutions. Depending on the legal structure of the merger, current law sets deadlines on how long the regulators may take to make a decision on a merger application, and the regulators have internal guidelines on how long the approval process should take. Section 201 would replace existing statutory deadlines with new ones. It would require the relevant bank regulators to notify a merger applicant within 30 days of any information needed to complete an application and then notify the applicant within 30 days of any deficiencies in the application. It would require the regulators to grant or deny an application within 90 days (with the potential to extend the deadline by 30 days) regardless of whether the initial application was complete. If the regulators have not made a determination within that time period, the application would be deemed granted. For more information, see CRS In Focus IF11956, Bank Mergers and Acquisitions. Stress Tests Large bank holding companies are subject to stress tests- simulations to see if they would still be adequately capitalized in severely adverse economic environments. Capital requirements for each large bank are based in part on the outcome of the stress test run by the Federal Reserve (Fed) via the stress capital buffer. In 2019, the Fed issued a final rule that increased transparency surrounding the stress tests by disclosing more information on the Fed's models. In 2023, two banking trade groups filed a petition requesting that the Fed engage in notice and comment

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