Podcast Keeping An Ear To The Ground In Washington

House Republicans continue to push for significant regulatory reforms for the banking industry, but the lack of support on the other side of the aisle makes changes this year unlikely.

In the second episode of S&P Global Market Intelligence's podcast, Street Talk, we spoke with Isaac Boltansky, director of policy research at Washington, D.C.-based Compass Point Research and Trading, on April 28 about the likelihood of proposed reforms seeing the light of day in their current form.
That bill would reduce regulations for any bank reporting an elevated capital level, designated as a leverage ratio greater than 10%. The bill would also aim to significantly curtail the Consumer Financial Protection Bureau and repeal the Durbin amendment and Volcker rule. The former limits interchange fees on debit card transactions, while the latter restricts proprietary trading, limits market-making activities and brings additional reporting requirements.The White House has offered plenty of rhetoric around reducing regulations, including those governing the banking industry, with President Donald Trump most recently promising a "major haircut" to the landmark Dodd-Frank Act. The House Financial Services Committee has offered the most concrete policy proposals to date, unveiling the revised Financial CHOICE Act a few weeks ago.

Boltansky placed the provisions of the CHOICE Act into three buckets: "non-starters;" "things the Senate could accept" if attached to other provisions; and other changes that could come through messaging from regulators.

Boltansky explained why some proposals such as the repeal of the Durbin amendment would be in the first bucket, calling it the best example of a measure that lawmakers do not want to deal with anymore. He said the changes to the Volcker rule, meanwhile, could come from regulators eventually reopening the rulemaking process and making an adjustment to increase market liquidity.

The policy analyst expects the CHOICE Act to pass in the House, but said the likelihood of passage in the Senate remains less clear. He does, however, believe that bank regulation is poised to ease over time.

"We will absolutely see a softening of the enforcement environment. The supervisory environment will improve for banks. It's just going to take time," Boltansky said.

Street Talk is a podcast hosted by S&P Global Market Intelligence. Listen to the full episode here.