In this report, we sum up action yesterday on Senate Banking’s FinReg bill to analyze not only the final package in more detail than we provided yesterday, but also with an eye towards next steps in the Congress and the debate’s broader political impact. As FDIC Vice Chairman Hoenig’s statement makes clear, vigorous debate will continue on whether to retain the Dodd-Frank increased-prudential standards above a $250 billion threshold or shift to the activity-based approach advancing in bipartisan legislation (see FSM Report SIFI23). Mr. Hoenig also renews his opposition to eliminating the SLR for custody bank central-bank deposits (see FSM Report LEVERAGE10) on grounds that these banks commingle other financial activities and have operational risk that warrants the leverage-capital charge. Unsurprisingly signaling alignment with Treasury’s FinReg policy, Comptroller Otting praised the bill for rebalancing the Dodd-Frank framework, noting in particular the community- and regional-bank changes. Sen. Crapo (R-ID) struggled yesterday to retain the carefully-structured framework of the bill as introduced (see FSM Report SIFI24), using his manager’s amendment to add only relatively non-controversial bills advancing in the House to lay a still more robust conference platform.
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