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Changes for Community Banks in Shelby’s Regulatory Relief Bill

  • by Amber Goodrich
  • May 14, 2015

A full discussion draft of Senate Banking Committee Chairman Richard Shelby’s regulatory relief bill was released on Tuesday, May 12. This legislation could mean some big changes are in store for community and regional banks.

Known as the Financial Regulatory Improvement Act, this bill is highly anticipated for its sweeping implications of reform in the banking industry. These reforms could result in updates to several major rules, including the CFPB’s Qualified Mortgage rule and threshold standards under Dodd-Frank.

5 Things You Need to Know About the Financial Regulatory Improvement Act

The draft, at 200+ pages, takes special notice of small banks, including 25 different measures intended to loosen regulations on such entities. There are a few key provisions in the Financial Regulatory Improvement Act draft that are worth noting for community and regional banks:  

  1. Qualified Mortgage (QM) Safe Harbor

    Banks of any size would be permitted a “safe harbor” from the QM rule as long as the loans are held in portfolio and certain criteria are met.

  2. Privacy Disclosures

    Banks would be permitted to send out privacy disclosures when policies change instead of annually.

  3. Regulatory Exam Schedules

    The regulatory exam schedule for banks between $500 million and $1 billion in assets would be extended from 12 to 18 months.

  4. Shortened Regulatory Reporting

    Highly rated community banks would be permitted to file shortened regulatory reports for two quarters of the year.

  5. Volker Rule Exemption
  6. Banks under $10 billion in assets may be exempted from the Volker Rule.

Reaching a Bipartisan Agreement on Regulatory Relief

With the bill scheduled for a panel vote on May 21, lawmakers have just a few days to negotiate the language contained in the bill. Chairman Shelby released this statement regarding the draft:

“This discussion draft is a working document intended to initiate a conversation with all members of the Committee who are interested in reaching a bipartisan agreement to improve access to credit and to reduce the level of risk in our financial system. I look forward to engaging with members of the Committee on specific proposals in the discussion draft.”   


On Thursday, May 21, the Senate Banking Committee approved the regulatory relief bill by a party-line vote of 12-10. Negotiations will continue this summer. Stay tuned for updates. 


 Amber Goodrich, Compliance Strategist for CSI Regulatory Compliance, has more than 10 years of financial industry experience. She is a Certified Regulatory Compliance Manager (CRCM) and Certified Bank Secrecy Act (BSA) Professional (CBAP).