Summary of the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155)

by Poyner Spruill LLP
Contact

Poyner Spruill LLP

In the early evening of May 22, 2018, the U.S. House of Representatives approved the Economic Growth, Regulatory Relief and Consumer Protection Act (the Act), paving the way for certain signature by the President. The House passed the exact version of a bill that was earlier approved in March 2018 by the Senate (Senate bill 2155). Each house passed the bill on a relatively bipartisan basis: in the Senate by a vote of 67-31, and the House by a vote of 258-159 (with 10 members not voting).

Despite some press reports to the contrary, the Act should not be construed as a widespread repeal of the Dodd-Frank Act. Notably, Rep. Jeb Hensarling, Chairman of the House Financial Services Committee, did not get everything he wanted, including complete repeal of the Volcker Rule, and has pledged to introduce additional regulatory relief before year-end. Such additional reform is unlikely, as Senator Mark Warner (who voted for Senate passage) opined that Senate Democrats collectively went as far as they could with this version.

The Act is divided into six titles, which aim to: improve consumer access to mortgage credit (Title I); provide regulatory relief and protect consumer access to credit (Title II); protect the credit information of consumers, including veterans and servicemembers (Title III); tailor regulations for certain Bank Holding Companies, including raising the threshold levels for exemption from certain prudential standards and stress testing (Title IV); encourage capital formation by reforming certain Securities and Exchange Commission (SEC) regulations (Title V); and protect student borrowers (Title VI).

While the Act covers a wide-range of financial activities, there are a number of elements likely of consequence to our North Carolina clients:

Access to Residential Mortgage Credit

  • Residential mortgages originated by an insured bank or credit union having less than $10 billion in total consolidated assets will be deemed a “qualified mortgage” under the Truth in Lending Act (TILA), so long as the originating lender holds the loans in portfolio.
  • Small depository institutions originating fewer than 500 closed-end residential mortgage loans or 500 open-end lines of credit (measured separately) in each of the preceding two calendar years will be exempted from reporting the new Home Mortgage Disclosure Act (HMDA) data elements that were added in the 2015 Final Rule that went into effect January 1, 2018, provided that the institution received certain qualifying Community Reinvestment Act ratings in the recent past. According to industry estimates, this exemption will allow 85% of depository institutions to avoid reporting of the new data elements (even though capture of such elements still will be required). We have previously reported on the redlining implications of HMDA reporting [here] and [here].
  • Residential mortgage loan originators may receive temporary, transitional licensure when moving from employment with a depository institution to a non-depository institution, such as a mortgage broker or mortgage lender, or when moving across state lines.
  • Insured banks and credit unions with total consolidated assets of less than $10 billion will be exempted from mandatory escrow requirements for certain higher-priced residential mortgage loans.
  • The present three-day waiting period under the TRID rules is lifted when a creditor provides a consumer with a second offer of credit having a lower Annual Percentage Rate. (However, a careful reading of the Act raises questions as to whether the intended TILA section was properly referenced in the bill.)

Community Bank Regulatory Relief and Enhanced Consumer Access to Credit

  • Community banks with less than $10 billion in total consolidated assets will be deemed to be in compliance with capital and leverage requirements even when they maintain tangible equity in an amount that causes their community bank leverage ratio¹ to exceed 10%.
  • Banking entities will be exempted from compliance with the Bank Holding Company Act Section 13 prohibition on proprietary trading or interest in or sponsorship of a hedge fund or a private equity fund if consolidated assets total less than $10 billion and total trading assets and trading liabilities are not more than five percent of total consolidated assets.
  • The total consolidated asset threshold for required compliance with the Federal Reserve’s Small Business Holding Company Policy Statement is raised from $1 billion to $3 billion.
  • Certain depository institutions with total consolidated assets of less than $5 billion will now be subject to reduced call reporting requirements.
  • The consolidated asset threshold for qualification for an 18-month examination cycle by prudential regulators is raised from $1 billion to $3 billion for “well-managed, well-capitalized” banks.
  • The process for verifying the personal identification of a consumer applying on-line for a financial service or product will be simplified.
  • Certain High Volatility Commercial Real Estate (HVCRE) credit facilities will no longer be subject to heightened risk weighting under risk-based capital rules. See further analysis of this issue [here].
  • The Social Security Administration must accept an electronic signature as consumer consent for verification of customer identity by a financial institution.

Protection of Consumer Information

  • In light of the recent Experian data breach, credit reporting bureaus must now provide to consumers, under certain circumstances, fraud alerts and unlimited, free security freezes and freeze releases.
  • The Fair Credit Reporting Act will be amended to exclude from consumer reporting information certain medical debts incurred by veterans and also establish a new dispute process with respect to such medical debt.
  • The Protecting Tenants at Foreclosure Act of 2009, which had sunset as of December 31, 2014, is now permanently restored.
  • Veterans are now protected from certain predatory lending practices when refinancing a VA-insured residential mortgage loan.
  • Fannie Mae and Freddie Mac must establish a process for validating and approving new, alternative credit scoring models for use in underwriting residential mortgage loans under standards and criteria to be established by the Federal Housing Finance Agency (FHFA). FHFA is currently studying this issue on a voluntary basis, based on an earlier industry request that FHFA consider an alternative credit scoring model created by the primary competitor to FICO, which competitor is under the financial control of the three major credit reporting bureaus.

Tailored Regulations for Certain Bank Holding Companies

  • The requirement for compliance with certain prudential standards will be lifted immediately for bank holding companies (BHCs) having between $50 billion (the previous floor threshold for compliance) and $100 billion in total consolidated assets, and similar relief for BHCs with assets of between $100 and $250 billion will become effective 18 months from the enactment date of the Act. As to this latter category, the Federal Reserve must conduct periodic supervisory stress testing and will have the authority to apply prudential standards as appropriate.
  • The threshold for required periodic performance of internal stress testing by BHCs will be raised from $50 billion in total consolidated assets to $250 billion.
  • For purposes of the Liquidity Coverage Ratio final rule, the federal prudential regulators must classify qualifying investment-grade, liquid, readily marketable municipal securities as level 2B liquid assets.

Encouraging Capital Formation

  • The limitation on the number of individuals allowed to invest in certain venture capital funds without registration with the SEC as “investment companies” is increased from 100 to 250 investors in the fund.
  • The 12-month sales threshold for provision to investors of certain disclosures related to compensatory benefit plans is increased from $5 million to $10 million, to be indexed every five years based on the Consumer Price Index, rounded to the nearest $1 million in sales.
  • The SEC must expand its Regulation A+ rules (currently exempting from registration certain securities offerings by smaller issuers) to include companies that are “fully reporting” companies under the Securities and Exchange Act of 1934.
  • SEC registration rules must be revised to allow a closed-end company selling a limited number of shares to investors in an initial public offering to use offering and proxy rules currently available to other issuers of securities, thereby reducing the filing requirements and restrictions on investor communications in certain circumstances.

Protections for Student Borrowers

  • Private student lenders are prohibited from declaring a default or accelerating the debt of a student borrower solely on the basis of the bankruptcy filing or death of a co-signer. Co-signers of private student loans will also be released from obligation on the debt following the death of the student borrower.

The Act reduces a number of prior regulatory requirements for banks of all sizes; however, the changes it contains are often technical and need to be carefully reviewed and implemented. As is the case with any change in the regulatory environment, whether it be imposition of new compliance requirements or relaxation of former constraints, consultation with experienced legal counsel is highly recommended.

———

¹ The Act mandates that federal prudential regulators require their regulated institutions to maintain a “community bank leverage ratio,” calculated as tangible equity to average total consolidated assets, of between eight and ten percent. This capital requirement will be eliminated for smaller community banks.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Poyner Spruill LLP | Attorney Advertising

Written by:

Poyner Spruill LLP
Contact
more
less

Poyner Spruill LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.