The Congressional Research Service ("CRS") identified banking policy issues facing the 116th Congress. In the report, CRS highlighted the following issues:

  • the extent to which "safety and soundness" regulations are effective and "appropriately balance benefits and costs";
  • whether regulations strike a balance between protecting consumers and ensuring access to credit and "justifiable compliance costs";
  • whether Community Reinvestment Act regulations are effective in encouraging banks to provide credit;
  • whether relaxing large bank and "too big to fail" rules will provide relief for these banks or "unnecessarily pare back important safeguards";
  • the "degree to which regulatory burden, market forces, and the removal of regulatory barriers to interstate branching and banking" are contributing to the decrease in the number of community banks;
  • whether permitting companies with a focus on technology to operate as banks results in appropriate regulation of financial services or "inappropriately extend[s] government-backed bank safety nets and disadvantage[s] existing banks"; and
  • whether increases in regulation could "drive certain financial activities into a relatively lightly regulated 'shadow banking' sector."

Commentary / Mark Chorazak

The CRS has assembled a cogent summary and useful primer on some of the key issues currently being debated in the banking industry. The report is not very detailed (and some important issues, like government-sponsored enterprise reform, are not given any treatment), but its brevity makes it an approachable read. Congressional staffers new to banking policy issues would find it well worth their time.

With the financial crisis well behind us, Congress needs to address the new challenges to the stability, resiliency and inclusiveness of the U.S. banking system. Cybersecurity, for example, is the biggest threat. In addition, the digital transformation of banking has revealed how aspects of certain laws (such as the Community Reinvestment Act's "assessment area" concept) may be outdated or may not be sufficiently reflective of how consumers increasingly obtain financial products and services (especially from nonbank providers).

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