Recent years have been a particularly transformative period for banking. Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act ( P.L. Meanwhile, market forces and economic conditions continue to affect the banking industry coincident with the implementation of new regulation. This report provides a broad overview of selected banking-related issues, including prudential regulation, consumer protection, "too big to fail" (TBTF) banks, community banking, regulatory agency structures and independence, and recent market and economic trends. 10 ) and the Economic Growth, Regulatory Relief, and Consumer Protection Act ( S. 2155 ). These "safety and soundness" regulations are designed to ensure banks are safely profitable and to reduce the risk of failure. These levels are expressed as ratios between items on bank balance sheets and are called regulatory ratio requirements . Banks have been subject to ratio requirements for decades. The largest banks are required to hold more capital than smaller, less complex banks. These ratios for large banks will be covered in the " Enhanced Prudential Regulation " section below. However, others assert the use of risk-weighted ratios should be limited. Finally, whether the benefits of prudential regulation—such as the increase in bank safety and the increase in financial system stability—are outweighed by the potential costs of reduced credit availability and economic growth is an issue subject to much debate. This section provides background on consumer protection and analyzes issues related to it, including
the degree to which the Consumer Financial Protection Bureau's (CFPB's) authorities, structure, regulations, and enforcement actions have struck the appropriate balance between protecting consumers and the availability of credit; and whether certain mortgage lending rules have struck the appropriate balance between protecting consumers and the availability of credit. Unfair, deceptive, or abusive acts and practices are prohibited. Supporters of raising the threshold argue it would appropriately reduce the regulatory burden on banks that are still relatively small, and "would still be examined by their primary regulators who are required by law to enforce the CFPB rules and regulations," and the change would only mean banks "wouldn't have to go through yet another exam with the CFPB in addition to the ones they already have to go through with their primary regulators." In addition, CFPB rulemaking, supervisory, or enforcement authorities could be altered or removed. A long-standing issue in the regulation of mortgages and other consumer financial services is the perceived trade-off between protecting consumers and the availability of credit. However, some observers assert that part of what makes some financial firms too big to fail is that the bankruptcy process is not amenable to resolving a large financial institution without disrupting the financial system. Other observers assert that the regulatory burden facing small banks is appropriate, and note that small banks are given special regulatory consideration to minimize their regulatory burden. Regulatory Agency Design and Independence

Financial regulatory agencies are invested with the authority to regulate, and most of them are referred to as independent regulatory agencies , allowing them to operate with a relatively high degree of independence from the President and Congress. Some effects are difficult to quantify and monetize. However, experts disagree over whether greater discretion for financial regulators is appropriate. This section analyzes certain issues related to trends that may concern banks, including
migration of financial activity from banks into nonbanks or the "shadow banking" system; increasing capabilities and market presence of financial technology ("fintech"); increasing interest rates in the future; and competitive and regulatory issues related to institutions with different charters but similar business models—such as banks, thrifts, and credit unions. Furthermore, some argue that the increased regulatory burden placed on banks in response to the financial crisis—such as the changes in bank regulation mandated by Dodd-Frank or agreed to in Basel III—could result in a decreasing role for banks in credit intermediation and an increased role for relatively lightly regulated nonbanks. As a result, each type of institution has a stake in proposed changes to regulation related to all charter types. H.R. S. 2155 proposes wide-ranging changes to the financial regulatory system, and it contains provisions related to banking issues, including provisions found in Titles I, II, and IV.
The financial crisis and the ensuing legislative and regulatory responses greatly affected the banking industry. Many new regulations—mandated or authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) or promulgated under the authority of bank regulators—have been implemented in recent years. In addition, economic and technological trends continue to affect banks. As a result, Congress is faced with many issues related to the bank industry, including issues concerning prudential regulation, consumer protection, "too big to fail" (TBTF) banks, community banks, regulatory agency design and independence, and market and economic trends. For example, the Financial CHOICE Act (H.R. 10) and the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) propose wide-ranging changes to the financial regulatory system, and include provisions related to many of these banking issues.
Prudential Regulation. This type of regulation is designed to ensure banks are safely profitable and unlikely to fail. Regulatory ratio requirements agreed to in the international agreement known as the Basel III Accords and the Volcker Rule are examples. Ratio requirements require banks to hold a certain amount of capital on their balance sheets to better enable them to avoid failure. The Volcker Rule prohibits certain trading activities and affiliations at banks. Proponents argue the rules appropriately balance the need for safety and soundness with regulatory burden. Opponents argue that current rules are overly complex, unduly burdensome, and difficult to enforce.
Consumer Protection. Certain laws and regulations protect consumers from unfair, deceptive, or abusive acts and practices. Regulations promulgated by the Consumer Financial Protection Bureau (CFPB) and certain mortgage lending rules are contentious issues in this area. Observers disagree over whether CFPB authorities, structure, regulations, and enforcement actions appropriately balance the benefit of protecting consumers and the potential costs of unnecessarily burdening banks and restricting credit availability. A similar debate is about whether mortgage rules appropriately protect consumers and effectively align certain market incentives or unnecessarily reduce the availability of mortgages.
"Too Big To Fail" Banks. Regulators also regulate for systemic risks, such as those associated with TBTF financial institutions that may contribute to systemic instability. Dodd-Frank Act provisions include enhanced prudential regulation for TBTF banks and changes to resolution processes in the event one failed. Proponents of these changes assert they will eliminate or reduce excessive risk-taking at, and bailouts for, these large banks. Opponents assert that market forces and bankruptcy law are more effective and less distortionary than the new regulations and resolution authorities.
Community Banks. The number of relatively small banks has declined substantially in recent decades. Some analysts assert market forces and removal of regulatory barriers to interstate branching and banking are having a large effect, given that small banks are exempt from many recent regulations and have been consolidating for decades. Others assert small institutions have limited resources and are being unnecessarily burdened by regulation, especially because such banks are unlikely to contribute to systemic risk.
Regulatory Agency Design and Independence. How regulatory agencies are structured and promulgate rules are also issues. Some assert that financial agencies' relatively high degree of independence from the President and Congress results in too little accountability in rulemaking; thus, their leadership structures, funding, and rulemaking procedures should be altered. Opponents of such measures maintain that financial regulator independence should be maintained because it allows regulations to be promulgated by technical experts with some insulation from political considerations.
Recent Market and Economic Trends. Changing economic forces may also pose issues to the banking industry. Increases in regulation could drive certain financial activities into a relatively lightly regulated "shadow banking" sector. Innovative financial technology may alter the way certain financial services are delivered. Interest rates are likely to begin rising soon after a long period of low rates, which could present risks to banks. Competition and regulatory differences between banks and nonbanks with different charter types is an ongoing issue.