The “Crapo Bill” and Why You Should Know About It

It might have been a blip on the nightly news or you may have heard about it in passing, but unless you actively follow politics, there’s a good chance that you have not yet heard of Public Law 115-174 - alternately known as “The Crapo Bill” after Republican Senator Mike Crapo of Idaho who largely sponsored the bill. Essentially, the bill aims to deregulate banks, which is something the government tried to largely guard against by enacting the Dodd-Frank Act of 2010. The Dodd-Frank Act required banks of a certain size to undergo regulatory scrutiny including stress tests - the standard test used to determine whether or not a bank can withstand an economic crisis.

The New Threshold

Under the new law, banks that have assets over $250 billion are subject to stress tests and regulatory assessments - that number used to be $50 billion. Banks with less than $100 billion in assets would be completely freed of any scrutiny. If you’re wondering which banks might fall in that bracket, those impacted would be KeyBank, American Express, SunTrust Bank, and a slew of other banks no longer subject to federal assessments or regulations. Larger banks (those over the $250 billion marks) are still subjected to federal scrutiny, but this scrutiny would be based on an individual case-by-case basis. In other words, larger banks do not all have to live up to the same regulations across the board. There are two ways to see this new amendment to the Dodd-Frank Act.

The Perspectives

Allowing smaller banks (those under the $100 billion mark) to operate without upholding a number of federal regulation terms gives those smaller banks a break, so to speak. The issue is that allowing those banks to operate without scrutiny could mean economic turmoil since some influential or important banks are amongst those counted as under that dollar amount. Treating larger banks on an individual basis (instead of a collective basis) can also be viewed as logical since no two banks are the same. However, this would also, potentially, allow for more wiggle room within larger banks as some may be treated differently than others. As always, we will keep an eye on this and other legislation that affects consumers. At the Dellutri Law Group, our goal is to Empower Consumers.