Local bankers support bill that loosens bank regulations

Local bankers favor a bill that passed the Senate last week that loosens regulations on smaller banks.

Senate Bill 2155 rolls back some of the regulations in the Dodd-Frank Act that was passed to regulate banks during the Great Recession.

Montana Sen. Jon Tester was a key proponent of the reform bill.

Appearing on Fox News last week, Tester said, “This bill doesn’t remove regulations from banks, but it certainly softens some of the regulation on small banks, credit unions and intermediate sized banks. It was a big bill that needed to be modified.”

The bill passed on a bi-partisan vote 67-31 last Wednesday. Republican Sen. Steve Daines voted for the bill.

Among other things, the bill amends the Truth in Lending Act, to allow institutions with less than $10 billion in assets to waive ability-to-repay requirements for certain residential-mortgage loans. Other mortgage-lending provisions related to appraisals, mortgage data, licensing of loan originators, manufactured homes, escrow requirements, and transaction waiting periods are also modified.

From a practical standpoint, it makes it easier for small banks to make mortgage loans to borrowers, noted Freedom Bank President Don Bennett.

For example, a person might be small business owner, but because the way they do their books, they might not show enough income for a loan, even though the bank knows they’re successful.

With the relaxed rules, the bank could qualify them for a mortgage without having to meet the previous stringent federal requirements, as long as the bank holds the loan. If the bank sells the loan, then it would be subject to tighter regulations.

The bill also lengthens the cycle of federal examinations to banks in good standing to 18 months instead of a year. Bob Nystuen, marketing president of Glacier Bank said federal “stress testing” of loan portfolios resulted in a lot of effort on the part of small banks that proved onerous, expensive and time consuming.

He said another aspect of the bill relaxes some of the appraisal requirements for loans. With some rural properties, it can be difficult to find a quality appraisal.

“We’re incredibly happy to see bi-partisan support for Senate Bill 2155,” Nystuen said.

But the bill also had its critics.

“Republicans and Democrats came together today to deregulate the big banks and set the stage for another financial crash,” Elizabeth Warren, a Massachusetts liberal Democrat said Wednesday after the vote, Politico reported.

The bill now goes onto the House.