Last week, prior to departing for the Memorial Day recess, members of Congress made some positive progress on several banking issues. First, the U.S. House Committee on Financial Services passed three important bills, two of which deal with mortgage lending. H.R. 2673, the Portfolio Lending and Mortgage Access Act, would allow banks that originate mortgages and hold the loans in their portfolios to meet the tests for Ability to Repay and for Qualified Mortgage. Thus, this bill essentially exempts banks from these requirements on loans where the bank assumes all credit risk.
The committee also passed H.R. 4521, the Community Institution Mortgage Relief Act. This bill increases the small servicers’ exemption from 5,000 loans to 20,000 loans before being required to meet the new escrowing rules. There was a general understanding that managing escrow accounts for mortgages would place an undue burden on small servicers.
Finally, the committee passed H.R. 4466, the Financial Regulatory Clarity Act of 2014, which would require federal financial regulators to consider — prior to issuing new regulations — whether the proposed regulations are duplicative or inconsistent with existing regulations. While these three bills face a long road before being enacted, it was a positive start to get them out of committee.
Good news was not limited to the House of Representatives, as the Senate confirmed the appointment of Stanley Fischer to the Federal Reserve Board. Soon a second vote will be taken to confirm him as the board’s vice chairman. The confirmation of Fischer would bring the board to five members, with two vacant seats; however, the resignation of board member Jeremy Stein is effective today. Therefore, after Fischer’s confirmation, the board will be back down to four members, with three seats open. President Obama has put forward one candidate, who has not yet been confirmed. Remaining will be two openings for which the president has not yet put forth nominees. There have been numerous calls from Congress and from Federal Reserve Board Chairman Janet Yellen to nominate at least one candidate who has extensive knowledge and experience in community banking. We in the industry certainly have been working toward that end for the past several months.
Even though it was a good week for banking in Washington, DC, there was some negative news. Sen. Patrick Leahy, D-Vt., pulled from consideration S. 1720, a bill that was intended to deal with frivolous claims for royalties from patent trolls. This issue remains a huge problem for banks, with no resolution in sight. Thousands of hours have been spent trying to move this legislation forward, so it is quite a blow to have it removed from consideration.
Congress returns to Washington, DC, this week. We hope that lawmakers will continue their efforts to provide relief from some of the most egregious effects of the Dodd-Frank Act. Realistically, few issues will make it to the president’s desk this year. This being an election year, members will want to get home to campaign for re-election this fall. Much of what is occurring now is setting up issues for discussion in 2015, and we are readying to set up our efforts, too.
S. Joe DeHaven