Ten years after the financial crisis, the US Congress voted to ease the rules regulating the nation’s banking sector in order to simplify the activities of small and medium-sized banks.
The House of Representatives of the US Congress on Tuesday, May 22, voted 258 to 159 to relax the rules for regulating the banking sector.
The deregulation will exempts small and medium banks of “excessive regulation”. In particular, the processes of trade, loans and capital regulation for banks with assets below $ 10 billion were simplified. The threshold of the volume of assets, under which banks are subject to tighter control, has been increased from 50 to 250 billion dollars.
At the same time, the key elements of the Dodd-Frank Act of 2010 on financial reform, which was adopted after the 2008 crisis, will remain in force for the largest financial institutions in the United States. In particular, we are talking about the so-called Volcker rule, which limits banks from engaging in risky trading using insured retail deposits..
The Dodd-Frank act limited the activities of banks, hedge funds and derivatives trading, which allowed the United States to effectively pull out the worst economic crisis since the Great Depression. The legislation, signed by Barack Obama, in particular, obliged financial institutions to increase the share of equity in order to avoid the occurrence of excessive debt.
The Federal Deposit Insurance Corporation said that banks reported $56 bn in profits in Q1 of 2018, a 27.7 percent jump over the same period last year. Even without the corporate tax cuts President Trump and congressional Republicans passed last year, the banks would have still reported a 12 percent improvement in quarterly profits to $49.4 bn.