In this report, we analyze today’s Senate Banking hearing on the role of mid-sized and regional banks, one in a series of sessions the panel is using to hear all sides as it takes its time crafting what at least at the start will be a bipartisan reform bill.  Although the hearing was rushed due to floor votes, Chairman Crapo (R-ID) reiterated his support for many of the Treasury report’s recommendations (see Client Report REFORM136).  These include improving CCAR, changing the $50 billion asset threshold, and exempting banks with limited trading activity from the Volcker rule.  However, he also stressed that the committee has only begun its work.  Ranking Member Brown (D-OH) again said that there may well be agreement on modifying the regulatory regime for regional banks but stressed that there should be no relief for the biggest banks, blasting efforts he said would weaken living wills and repeal OLA.  Republicans such as Sen. Cotton (R-AR) criticized the $50 billion SIFI threshold and suggested that noncomplex banks up to $500 billion could be less risky than smaller ones that engage in riskier activities.  Sen. Warren (D-MA) argued that changing the $50 billion threshold would be rolling back a significant part of Dodd-Frank.  Other Democrats such as Sen. Cortez Masto (D-NV) criticized the Treasury report for not focusing more on consumer protections.

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