Senators Jon Tester, D-Mont., and Jerry Moran, R-Kan., introduced a bill today (S. 1139) that would raise the threshold for a banking organization to be subject to Dodd-Frank Act Stress Tests (DFAST) to $50 billion in total consolidated assets from the current $10 billion threshold.  The bill, titled the Main Street Regulatory Fairness Act, would provide relief for 72 banking organizations that currently have consolidated assets of $10 billion or greater, but less than $50 billion.  The bill would also provide federal banking agencies with flexibility to require the DFAST exercise to be conducted less frequently than annually for banking organizations that would remain subject to DFAST.

Earlier this month, Senators Tester and Moran also reintroduced the CLEAR Relief Act, S. 1002, which would provide relief to community banks that includes:

  • amendments to the “qualified mortgage” definition to include any mortgage originated and retained for at least three years by a bank with less than $10 billion in total consolidated assets;
  • an exemption from the Volcker Rule for banking organizations with $10 billion or less in total assets;
  • an exemption from the requirement of the Sarbanes-Oxley Act to conduct annual management assessments of internal controls for banking organizations with $1 billion or less in total consolidated assets; and
  • an exemption from escrow requirements under the Truth in Lending Act for banks with $10 billion or less in total consolidated assets.

These two bills signal that bipartisan regulatory reform legislation is likely to focus on relief for community and midsize banking organizations rather than larger institutions.

Tags: Community Banks, DFAST, Midsize Banks, Stress Testing, Stress Tests, Volcker Rule
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Photo of Randy Benjenk Randy Benjenk

Randy Benjenk is a partner in Covington’s industry-leading Financial Services Group and focuses his practice on regulatory advice and advocacy. He represents domestic and foreign banks, fintech companies, and trade associations on compliance issues, corporate transactions, and public policy matters.

Chambers USA says…

Randy Benjenk is a partner in Covington’s industry-leading Financial Services Group and focuses his practice on regulatory advice and advocacy. He represents domestic and foreign banks, fintech companies, and trade associations on compliance issues, corporate transactions, and public policy matters.

Chambers USA says Randy has received “widespread praise” from clients, who describe him as “excellent” and say that “the quality of his legal work and his writing abilities were incredible” and “he’s very easy to work with, knowledgeable and efficient.”

Randy regularly advises clients on a wide range of regulatory matters, including:

  • Bank Activities and Prudential Regulation. Complex bank activities, structure, licensing, and prudential matters, often involving issues of first impression at the federal and state banking agencies.
  • Corporate Transactions. Mergers and acquisitions, spinoffs, charter conversions, debt and equity issuances, investments, strategic partnerships, de novo bank formations, and related regulatory applications and disclosures.
  • Private Equity Investments. Private equity investments in banks, bank investments in private funds, and fund structuring related to the Volcker Rule and Bank Holding Company Act.
  • Public Policy Matters. Regulatory and legislative policy matters, with an emphasis on changes arising out of U.S. banking legislation and international standards.
  • Crisis Response. Navigating extraordinary events, such as the COVID-19 pandemic and related governmental responses, and firm-specific matters.
  • Supervisory and Enforcement Matters. Compliance and safety and soundness issues that arise in the examination and enforcement contexts.
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