DBRS said that the Senate bill seeking to revise large portions of the Dodd-Frank Act as modest credit positive if it gets passed into law in its current form.
The bill, which raises the asset threshold for the enhanced regulation of systemically important financial institutions to $250 billion from $50 billion and exempts firms with less than $10 billion from the Volcker rule, was passed by the Senate on March 14.
In a March 19 report, DBRS wrote that the bill itself will not likely impact ratings, but it would be "another modest tailwind" for U.S. banks. The rating agency noted that the bill would help boost earnings of custody banks as it would require federal banking agencies to make changes in the computation of the supplementary leverage ratio. However, DBRS warned it could increase leverage and/or lower capital levels.
The rating agency added that even if the bill does not address the applicability of the Federal Reserve's Comprehensive Capital Analysis and Review process, if it gets enacted the Fed would most likely revise its requirements to align with the new law.
DBRS said the future of the Senate bill is unclear as the House of Representatives is now tasked with its own version of the bill. The House could go to conference and require the formation of a formal committee to reconcile the differences between the Senate package and the House's more aggressive Financial CHOICE Act.