GSE Reform and Regulatory Relief Among Some of the Legislative Battles in New Year

According to a recent American Banker article, the banking industry is expected to face a compressed legislative schedule and heightened focus on the 2016 elections, while the effort to move regulatory relief and other key provisions, such as government-sponsored enterprise (“GSE”) reform, in Congress is expected to continue this year.

Regulatory relief remains a top priority for banks in 2016 with several presidential candidates warning about the impact of Dodd-Frank on small institutions, and both parties’ lawmakers continuing to express interest in the issue.

Progressives remain skeptical about many proposed changes to Dodd-Frank, mainly those that would benefit larger firms as well as community banks, according to the article. The compressed schedule means that Congress will have to act quickly to move any bill along with the political climate growing more partisan.

American Banker notes that there will be a harder push for additional changes to the Consumer Financial Protection Bureau's "qualified mortgage" rule, particularly the ability to qualify for safe harbor on loans held in portfolio, and relief from requirements under Basel III. The fight over Dodd-Frank's $50 billion threshold for heightened capital and liquidity rules is also expected to continue.

In terms of GSE reform, American Banker predicts that there is likely to be continued discussion around what to do with the GSEs with a budget deal provision that would prohibit Treasury from selling their share of the GSEs until 2018.

House Representatives John Carney (R-DE), John Delaney (D-MD) and Jim Himes (D-CT) are also working on a bill to establish a mortgage insurance program through Ginnie Mae that would help to provide a government guarantee for MBS with private capital in a first-loss position. Congressman Carney notes that lawmakers are looking into possible pilot programs based on this legislation.

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