Recall a couple of months ago that we opined on passage in the Senate of the Economic Growth, Regulatory Relief, and Consumer Protection Act, or in shorthand, S.2155. While the opportunity to move forward on some key components of regulatory reform coupled with the sense of a more “supportive tone” toward the banking industry coming from Washington was surely welcome, what truly excited us was the fact that the Senate vote garnered true bipartisan support at a time when seemingly intransient political polarization seems to be the order of the day.
The March 14, 2018 vote tally on S.2155 was 67 – 31, with all 50 Republicans (Sen. John McCain was absent for health reasons) joined in support by 16 Democrats and one Independent. Here in Michigan, Sen. Peters and Sen. Stabenow (both Democrats) voted in favor of the Bill – a testament to the logic and rationale of its content and the educational outreach and lobbying efforts of community bankers (and both the CBM and MBA) across the state.
The legislative process then mandated that this Bill move to the House for consideration/vote and, ideally, reconciliation with the Senate before a final version could be crafted for the President’s signature. It is not a well-kept secret that political rancor in our nation’s capitol has, of late, been challenging for both sides of the aisle. Irrespective of one’s political persuasion, the March vote in the Senate seemed to demonstrate that fierce ideological gaps could be bridged with thoughtful compromise while not sacrificing the integrity of the objective nor the process.
The House vote was already bracing for a potentially significant emotional hurdle, as just a few days ago many conservative Republicans broke ranks with their party in defeating a seemingly “routine” farm bill. Frustrations over immigration enforcement played out on the House floor, sending the measure to a surprising defeat. With this party-line volatility hanging in the air, the hoped-for continuation of bipartisan support on banking legislation was in no way guaranteed.
Maybe, inevitably, constructive steps in banking reform ultimately seem to bring our lawmakers to a point of logical consensus and mutual collaboration. Earlier this week, the House voted 258 – 159 to approve the legislation that had earlier moved through the Senate. This meant that more than 30 Democrats crossed party lines in support of the Bill. And yesterday, as S.2155 was officially delivered to the White House, the President signed the legislation into law.
Coming out of the Financial Crisis, smaller banks typically carry approximately 1% – 2% higher tangible capital levels than their larger brethren, while exhibiting risk profiles that dwarf the exposures of our global giants. I’m quite confident that the operational complexities and world-wide risk exposures of a Citibank do not exactly mirror the challenges at XYZ Community Bank, yet existing Dodd-Frank legislation by-and-large said that they did. S.2155 is a first, yet significant, step forward in addressing some of those inconsistencies and functional challenges.
Bottom line, the March 14th vote in the Senate was encouraging, and the May 22nd vote in the House was validation. I applaud the tangible demonstration of cooperation and embrace the hope that it may signal a new bipartisan path forward on critical issues facing our nation.
ProBank Austin brings a multitude of experience, expertise and market knowledge to the table for our clients, spanning broad geographic swaths of the banking industry across this country….and the strong desire to continue to deliver that insight and value-add to all of you in the future. Please do not hesitate to reach out to me and/or any of my colleagues if we can ever be of assistance as you take your organizations forward and assess the competitive landscape.Click for the May 2018 Michigan Bank Summary