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From Banking and Finance Law Daily, October 10, 2017

House Financial Services Committee schedules consideration of regulatory relief bills

By Andrew A. Turner, J.D.

The House Financial Services Committee is scheduled to examine a series of legislative proposals on Wednesday, Oct. 11.

The schedule features H.R. 3299, the "Protecting Consumers’ Access to Credit Act of 2017," which would reaffirm the legal precedent under the National Bank Act and Federal Deposit Insurance Act that federal law preempts a loan’s interest as valid when made. Bill sponsor Chief Deputy Whip Patrick McHenry (R-NC), the Vice Chairman of the House Financial Services Committee, has said that the bill responds to the decision by the U.S. Court of Appeals for the Second Circuit in Madden v. Midland Funding, LLC . The Second Circuit held that the NBA does not have a preemptive effect after the national bank has transferred the loan to another party, a holding that McHenry said has created uncertainty for Fintech companies, banks, and credit markets.

Other bills scheduled for mark-up by House Financial Services Committee Chair Jeb Hensarling (R-Texas) include:

H.R. 1116, the "Taking Account of Institutions with Low Operation Risk Act of 2017" is intended to lower the regulatory compliance burden for smaller community banks and credit unions by requiring federal regulators to tailor regulations to fit the business model and risk profile of institutions.

H.R. 1699, the "Preserving Access to Manufactured Housing Act of 2017" would amend the Truth in Lending Act to modify the definitions of a mortgage originator and a high-cost mortgage.

H.R. 2148, the "Clarifying Commercial Real Estate Loans" is aimed at clarifying and improving regulatory capital rules for "high volatility commercial real estate" (HVCRE) that were previously adopted by the Federal Reserve Board and the Office of the Comptroller of the Currency. The bill would more clearly define the types of loans and projects subject to the 150-percent capital risk weight mandated by the HVCRE regulations.

H.R. 2396, the "Privacy Notification Technical Clarification Act" is intended to allow auto lenders to modernize their privacy notification process, cutting down on compliance costs passed along to consumers while increasing consumer access to important privacy information.

H.R. 2706, the "Financial Institution Customer Protection Act of 2017" is touted by sponsor Representative Blaine Luetkemeyer (R-Mo) as "the first step in putting an end, once and for all, to Operation Choke Point." The bill would require that federal agencies could not request or order a financial institution to terminate a banking relationship unless the regulator has material reason. Any account termination requests or orders would be required to be made in writing and rely on information other than reputational risk.

H.R. 2954, the "Home Mortgage Disclosure Adjustment Act" would reduce small bank and credit union Home Mortgage Disclosure Act data collection and reporting requirements. The bill targets amendments to Reg. C—Home Mortgage Disclosure (12 CFR Part 1003) that are scheduled to take effect on Jan. 1, 2018.

H.R. 3072, the "Bureau of Consumer Financial Protection Examination and Reporting Threshold Act of 2017" would increase the threshold from $10 billion to $50 billion for depository institutions to be subject to CFPB examination and reporting requirements.

H.R. 3312, the "Systemic Risk Designation Improvement Act of 2017" is designed to more closely base the regulation of financial institutions on risk rather than asset size alone. The bill would replace the $50 billion threshold for designation of a bank holding company as a systemically important financial institution with a series of standards intended to more accurately measure systemic importance.

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