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It's been a merry, merry month of May for banking lobbyists whose wish lists have long included the loosening of banking rules and regulations that were the fallout from the Wall Street-rocking financial crisis of 2008.
On May 21, President Donald Trump signed a bill that overturned auto-lending rules imposed by the Consumer Financial Protection Bureau, the much-maligned agency created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
The CFPB rule was meant to prevent discriminatory practices by auto lenders. The agency is now barred from imposing new restrictions of a similar nature without Congressional approval.
On May 24, the president signed legislation that, among other things, raised the too-big-to-fail threshold set by Dodd-Frank from $50 billion to $250 billion.
The move, which provides regulatory relief for all but a tiny sliver of the 1 percent of 6,500 U.S. banks that were subject to the rule, was applauded in a statement from ABA President and CEO Rob Nichols:
For the first time in nearly a decade, lawmakers from both parties have chosen to right-size financial rules that were not working as intended and holding the economy back. … [T]he common-sense changes included in S.2155 will help America's banks, particularly community banks, get back to the basics of lending to creditworthy borrowers and businesses.
On May 29, the Fed introduced a proposal to modify the Volcker Rule — named for former Federal Reserve Chairman Paul Volcker — which was intended to prevent banks from proprietary trading with depositors' funds, a practice that arguably precipitated the banking crisis of 2008.
This prompted a second statement from Nichols:
We are encouraged that today's proposed rule-making begins to address some of the complexity and uncertainty that has created needless compliance burdens and will allow banks to better serve their customers.
Volcker himself issued a statement saying that changes to the rule were needed:
I welcome the effort to simplify compliance with the Volcker Rule. What is critical is that simplification not undermine the core principle at stake — that taxpayer-supported banking groups, of any size, not participate in proprietary trading at odds with the basic public and customers' interests.
The Fed has opened a 60-day comment period for the proposed rule changes, and most certainly will hear from consumer watchdog groups opposed to the undoing of Obama-era post-crisis rules and regulations.
Karl Frisch, executive director of Allied Progress, a consumer advocacy organization, was among the first voices to speak up during the comment period:
Step by step, Wall Street continues its slow march on the path to rolling back all of the important consumer and market protections put in place after the 2008 financial collapse. These big banks are making record profits but that just isn't enough for them. They are hell-bent on regaining the ability to gamble, knowing it's other people's money on the line. Worse still, it looks like President Trump and his appointees are doing everything they can to reopen the casino.
The big question, of course, is what this means for everyday retail banking in general and the ATM channel in particular. Is the current anti-regulatory sentiment resounding across Capitol Hill a net positive or negative for the average banker or ATM deployer? Does it signal economic boom or deja vu bust?
With a very few exceptions, no one in the world wants to see a repeat of 2008. The question is whether banks have acquired the self-restraint to prevent a reoccurrence. Your answer to that question probably will depend on which of two competing clubs you are a card-carrying member of — History Never Repeats Itself or History Always Repeats Itself.
Everyone will have an opinion, but no one will have a crystal ball. So, as Mr. Trump himself is fond of saying ...
"We'll see. We'll see."
Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally.