Key elements of legislation that would ease bank regulation by rolling back parts of the Dodd-Frank law designed to prevent a repeat of the 2008-09 financial crisis.
—Makes a five-fold increase, to $250 billion, in the level of assets at which banks are deemed so big and plugged into the financial system that any one of them failing could bring severe disruption. The change would ease regulations and oversight on more than two dozen financial companies, including BB&T Corp., SunTrust Banks, Fifth Third Bancorp and American Express.
The exempted banks would no longer have to undergo an annual stress test conducted by the Federal Reserve. The test assesses whether a bank has a big enough capital buffer to survive an economic shock and continue lending. The banks also would be excused from submitting plans called “living wills” that spell out how a bank would sell off assets or be liquidated in the event of failure, in a way that wouldn’t create chaos in the financial system.
—Exempts banks and credit unions from requirements to report some mortgage loan data if they issue fewer than 500 home mortgages a year. That’s an estimated 85 per cent of U.S. banks, according to data from the federal Consumer Financial Protection Bureau.
The data to be exempt from reporting include the age of a loan applicant or borrower, credit score, total loan costs and interest rate. It’s new information added under 2010 legislation to data on borrowers’ financial information, race and sex, which would continue to be required for all banks.
—Offers protections for student loan borrowers, banning lenders from declaring a borrower in default because of the bankruptcy or death of a co-signer.
—Allows lenders to use alternatives to the dominant FICO system for determining consumers’ credit scores.
—Requires free credit freezes for consumers affected by data breaches. Currently most states allow the credit reporting companies to charge consumers a fee for freezing their credit.