April 12, 2019
Two Views of the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018
In May of 2018, Congress passed the Economic Growth, Regulatory Relief and Consumer Protection Act, a piece of legislation aimed at rolling back some of the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) of 2010, which was the law responsible for, among other things, the establishment of the Bureau of Consumer Financial Protection.
The chief aim of the new law was to diminish restrictions on the majority of American banks by relaxing the threshold of the “too big to fail” rubric from $50 billion and above to those institutions $250 billion and above, exempting these institutions from the stress tests imposed by Dodd-Frank and allowing them to cease the submission of what have been referred to as “living wills.” It drops the Volcker Rule, which limits risky bank trading, for banks with less than $10 billion in assets. The new law also relaxes requirements of loan data reporting for most banks.
On the consumer benefits side, it requires credit reporting companies to provide consumers with free credit monitoring services, and institutes some safeguards for student loan borrowers.
Despite the broad bipartisan support for the new bill, it naturally has both supporters and detractors. Both sides have been certain to make their positions clear.
Among the benefits supporters tout are:
- The bill will ease burdens imposed on lenders of small and medium size by Dodd-Frank, which will result in assisting with economic growth.
- Community banks will be able to see greater liquidity and loan mortgages with fewer regulatory drawbacks.
Among the drawbacks asserted by opponents of the bill (from both sides of the aisle) are:
- The easing of restrictions might result in an increase in discrimination in mortgage lending.
- The bill may expose taxpayers to a higher risk of liability in the case of another financial system collapse.
- The bill does not go far enough in drawing back the provisions of Dodd-Frank; some consider the 2010 bill a stifling influence on the financial services sector.
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