	Introduction

The 114 th Congress is considering legislation to provide "regulatory relief" for banks. The need for such relief, some argue, results from the increased regulation that was applied in response to vulnerabilities that became evident during the financial crisis that began in 2007. Bank failures spiked during the crisis, and changes to banking regulation were a key part of financial reform. They argue that the additional regulation has resulted in significant costs that have stymied economic growth and restricted consumers' access to credit. Others, however, contend the current regulatory structure has strengthened financial stability and increased protections for consumers. They are concerned that regulatory relief for banks could negatively affect consumers and market stability. The costs associated with government regulation are referred to as regulatory burden . Many of the legislative proposals analyzed in this report, however, would make changes to specific details of the regulation that regulators have issued. Safety and Soundness Regulations

The goal of safety and soundness (or prudential) regulation is to ensure that a bank maintains profitability and avoids failure. After the spike in bank failures surrounding the crisis, many of the reforms implemented in the wake of the financial crisis were intended to make banks less likely to fail. Whereas some view these efforts as essential to ensuring the banking system is safe, others view the reforms as having gone too far and imposing excessive costs on banks. 5983 would provide them with regulatory relief without requiring them to hold more capital. This is an example of how there is already some "tiering" of regulation for large banks. Supporters of the legislation argue that it is necessary to include the Dodd-Frank Act as well as the NCUA and the CFPB in the review in order to provide a more meaningful assessment of the regulatory burden facing financial institutions. Mortgage and Consumer Protection Regulations

Banks are also regulated for consumer protection. Several bills would modify regulations issued by the Consumer Financial Protection Bureau, a regulator created by the Dodd-Frank Act to provide an increased regulatory emphasis on consumer protection. The Dodd-Frank Act gave the CFPB new authority and transferred existing authorities to it from the banking regulators. The Dodd-Frank Act also directed the CFPB to implement several new mortgage-related policy changes through rulemakings. The bills included in this section could be viewed in light of a broader policy debate about whether the CFPB has struck the appropriate balance between consumer protection and regulatory burden, and whether congressional action is needed to achieve a more desirable balance. Supervision and Enforcement

Supervision refers to the power to examine banks, instruct banks to modify their behavior, and to impose reporting requirements on banks to ensure compliance with rules. Enforcement is the authority to take certain legal actions, such as imposing fines, against an institution that fails to comply with rules and laws. While regulators generally view their supervisory and enforcement actions as striking the appropriate balance between ensuring that institutions are well managed and minimizing the burden facing banks, others believe the regulators are overreaching and preventing banks from serving their customers. 22 / P.L. Disclosure requirements and investor protections may better inform investors about the risks that they are assuming, but can make it more costly for institutions to raise capital, and those costs might be passed on to customers in the form of higher fees or interest rates charged. While some view these existing regulatory requirements as important safeguards that ensure that investors are protected from fraud, others see them as unnecessary red tape that makes it too difficult for banks to raise the capital needed to expand or remain healthy.
The 114th Congress is considering legislation to provide "regulatory relief" for banks. The need for this relief, some argue, results from new regulations introduced in response to vulnerabilities that were identified during the financial crisis that began in 2007. Some have contended that the increased regulatory burden—the cost associated with government regulation and its implementation—is resulting in significant costs that restrain economic growth and consumers' access to credit. Others, however, believe the current regulatory structure strengthens financial stability and increases protections for consumers, and they are concerned that regulatory relief for banks could negatively affect consumers and market stability. Regulatory relief proposals, therefore, may involve a trade-off between reducing costs associated with regulatory burden and reducing benefits of regulation.
This report discusses regulatory relief legislation for banks in the 114th Congress that, at the time this report was published, has seen legislative action. Many, but not all, of the bills would make changes to the Dodd-Frank Act (P.L. 111-203), wide-ranging financial reform enacted in response to the financial crisis. The bills analyzed in this report would provide targeted regulatory relief in a number of different areas:
Safety and Soundness Regulations. Safety and soundness, or prudential, regulation is designed to ensure that a bank maintains profitability and avoids failure. After many banks failed during the financial crisis, the reforms implemented in the wake of the crisis were intended to make banks less likely to fail. While some view these efforts as essential to ensuring that the banking system is safe, others view the reforms as having gone too far and imposing excessive costs on banks. Examples of legislation include changes to the Volcker Rule, capital requirements, liquidity requirements applied to municipal bonds, and enhanced regulation for large banks. Mortgage and Consumer Protection Regulations. Several bills would modify regulations issued by the Consumer Financial Protection Bureau (CFPB), a regulator created by the Dodd-Frank Act to provide an increased regulatory emphasis on consumer protection. The Dodd-Frank Act gave the CFPB new authority and transferred existing authorities to it from the banking regulators. Many regulatory relief proposals could be viewed in light of a broader policy debate about whether the CFPB has struck the appropriate balance between consumer protection and regulatory burden. One legislative focus has been several mortgage-related CFPB rulemakings pursuant to the Dodd-Frank Act. Supervision and Enforcement. Supervision refers to regulators' power to examine banks, instruct banks to modify their behaviors, and to impose reporting requirements on banks to ensure compliance with rules. Enforcement is the authority to take certain legal actions, such as impose fines, against an institution that fails to comply with rules and laws. Although regulators generally view their supervisory and enforcement actions as striking the appropriate balance between ensuring that institutions are well managed and minimizing the burden facing banks, others believe the regulators are overreaching and preventing banks from serving their customers. Examples of legislation include changes to call reports and bank exams, as well as legislation addressing "Operation Chokepoint." Capital Issuance. Banks are partly funded by issuing capital to investors. Disclosure requirements and investor protections may better inform investors about the risks that they are assuming but can make it more costly for institutions to raise capital. Whereas some view these existing regulatory requirements as important safeguards that ensure investors are making educated decisions, others see them as unnecessary red tape that stymies capital formation. The capital issuance legislative proposals discussed in this report are generally geared toward making it easier for financial institutions to raise funds.
Congress faces the question of how much discretion to give regulators in granting relief. Some bills leave it up to the regulators to determine how much relief should be granted, whereas others make relief mandatory. Some bills provide relief in areas regulators have already reduced regulatory burden. Some of the legislation is focused on providing relief for small banks, whereas other bills provide relief to the entire industry.