With Volcker Rule Exemption, S. 2155 Relief Continues

Jul 12, 2019

chris-cole-150pxBy Chris Cole

More than a year has passed since the enactment of the S. 2155 regulatory relief law, but the ICBA-advocated measure is a gift that keeps on giving. 

Federal regulators recently issued a final rule exempting most community banks from the Volcker Rule’s prohibitions on proprietary trading. While community banks generally do not engage in proprietary trading or relationships with hedge funds or private equity funds, they nonetheless were covered under the rule and required to demonstrate compliance.

Not anymore. As advocated by ICBA since the Volcker Rule was first proposed a decade ago, this additional source of regulatory burden no longer applies to the vast majority of community banks.

The exemption specifically applies to community banks that have less than $10 billion in assets and trading assets and liabilities that are no more than 5 percent of total assets. According to ICBA data, that accounts for more than 5,200 community banks—roughly 97 percent of all U.S. banks.

Community bankers, you have yourselves to thank for this success. Your intense grassroots outreach is directly responsible for the development, passage, enactment and implementation of S. 2155.

While more work remains on this landmark law—specifically improving the Community Bank Leverage Ratio proposal and the underwhelming short-form call report final rule—it nevertheless continues to deliver significant regulatory relief. Together, we’ll keep up the pressure to maximize the relief contained in S. 2155 and continue building on it to help community banks continue meeting the needs of local customers and communities.

Chris Cole is ICBA executive vice president and senior regulatory counsel.