Senate Passes Banking Reform Bill

March 15, 2018

The U.S. Senate passed a bill Wednesday that would ease compliance costs for smaller banks and possibly lead to more lending for residential and commercial property purchases. The Economic Growth, Regulatory Relief, and Consumer Protection Act, S. 2155—which garnered bipartisan support—would lower reporting, disclosure, and other requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010 after the financial crisis. This would free up community banks—often the most important source of loan funds in rural areas—to make a larger variety of home loans than they currently are allowed.

The bill also would require the two largest sources of mortgage financing, Fannie Mae and Freddie Mac, to accept alternative credit scoring standards that use rent and utility payment histories to better measure whether loan applicants can be reliable borrowers.

NAR President Elizabeth Mendenhall said in a statement that the bill does a good job balancing reform with continued protections against the kind of lending excesses that characterized the financial crisis a decade ago. “REALTORS® believe that financial regulations need to be balanced with appropriate consumer protections, and we believe this bill achieves that goal.”

The House passed financial regulatory reform last year, although it varies considerably from the Senate bill. The two approaches can either be reconciled by both chambers, or the House can pass S. 2155 before regulatory reform can be signed into law by the president.

—Robert Freedman, REALTOR® Magazine