CRS Summarizes Banking Policy Issues

The Congressional Research Service ("CRS") provided an overview of "selected banking-related issues that may attract congressional interest in the 117th Congress."

In a new report, CRS highlighted issues related to: (i) prudential regulation; (ii) consumer access and fairness; (iii) the effects of the COVID-19 pandemic; (iv) community banking; (v) “too big to fail” concerns, (vi) fintech and (vii) environmental, social, and governance (ESG) expectations.

Specifically, CRS reviewed ongoing policy debates concerning:

• the balance between the effectiveness and the cost of prudential regulations intended to reduce the probability of bank failure, AML violations and cyberattacks;

• the implementation of the Community Reinvestment Act;

• COVID-19-related stress on the banking industry, including the implications of expiring loan forbearance and bank regulatory relief under the Coronavirus Aid, Relief and Economic Security ("CARES") Act and the regulatory effect of COVID-19-related bank asset growth;

• the substantial decline in small or community banks, and the lack of consensus on whether market forces or regulatory barriers are the reason for such decline;

• whether (i) charters should be granted to financial technology companies and (ii) the regulatory structure for bank partnerships with FinTech firms should be modified; and

• increased investor and social expectations for banks to evaluate environmental, social and governance (or "ESG") issues.