Smaller, less complex banking organizations will no longer be subject to stress testing and liquidity regulations, in concert with regulatory relief legislation enacted in May, the Federal Reserve Board said Friday.
In a statement, the Fed said that, consistent with the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155) – which was signed into law by President Donald Trump May 24 – it would no longer subject the smaller banks to certain board rules, including the stress test and liquidity regulations.
“Upon enactment, EGRRCPA raised the threshold for Dodd-Frank enhanced prudential standards from $50 billion to $100 billion in total consolidated assets for bank holding companies,” the central bank’s statement read. The statement noted that the change did not require Fed action “to have an immediate effect,” but the change did affect the application of several board regulations, the Fed stated.
“As a result, certain Board regulations are inconsistent with the new law,” the Fed acceded. “As described in the Board’s statement, the Board will not take action to enforce certain regulations and reporting requirements for firms with less than $100 billion in total consolidated assets, such as rules implementing enhanced prudential standards and the liquidity coverage ratio requirements. The Board will continue to supervise the firms to ensure their safe and sound operation.”
The Fed also noted that it is providing guidance, via its statement, on changes from the new law relating to assessments and high volatility commercial real estate exposures.
“The Board will take the positions described in the statement in the interim until the Board incorporates EGRRCPA’s changes into its regulations,” the Fed said.