The U.S. Treasury Department has officially issued its 150-page report, making several recommendations for how Congress and the regulatory agencies can streamline bank regulation in a way that promotes economic growth. The report came in response to President Trump’s executive order calling for a comprehensive review of the regulatory structure, and includes many recommendations for reform that the California Bankers Association has long pushed for, and will continue to advocate for, including the significant tailoring of regulatory requirements. 

Specific recommendations of note in the report include:

• Exempting banks with less than $10 billion in assets from Basel III
• Exempting banks with less than $10 billion in assets from the Volcker Rule
• Structural reform to the CFPB, including a call for the director to be removable for cause or replaced by a bipartisan commission, as well as for the bureau to be subject to congressional appropriations. It also called for the CFPB complaint database to be accessible only to federal and state agencies and for the CFPB to lose its supervisory authority.

While some of Treasury’s recommendations will require congressional action, it is worth noting that many of the recommendations can be immediately implemented by regulators through their independent rulemaking authority. Among them:

• Streamlining the FDIC de novo application process
• Easing appraisal requirements in rural areas
• Increasing the threshold for small creditor Qualified Mortgage loan
• Revisiting the volume and nature of supervisory Matters Requiring Attention
• Running the living will process on a two-year cycle
• More clearly defining the CFPB’s UDAAP standard

The report also highlighted numerous mortgage rules that the CFPB could address on its own, including:

• Aligning the QM standard with GSE eligibility requirements
• Eliminating underwriting requirements that deny mortgages to qualified borrowers
• Modifying the ability-to-repay calculation clarifying ongoing problems with the TILA-RESPA integrated disclosures
• Delaying the Home Mortgage Disclosure Act data expansion