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A new bipartisan effort could considerably raise the asset threshold for banks subject to Dodd-Frank stress testing, leaving some in the industry hungry for further deregulation down the line.
Sens. Jon Tester, D-Mont., and Jerry Moran, R-Kan., proposed the Main Street Regulatory Fairness Act on May 17. If passed, the legislation would change the threshold for banks subject to the stress tests, called DFAST, from $10 billion to $50 billion. Seventy-two of the nation's small and midsize banks would be impacted by the bill, according to a press release.
In an interview, Chris Cole, executive vice president and senior regulatory counsel of Independent Community Bankers of America, said he is hoping the bill leads to conversations about other ways to reduce the regulatory burden for banks crossing over the $10 billion asset threshold. He said he would rank DFAST as "third or fourth" on the list of expenses these institutions face, when compared to regulations like the Durbin amendment and Consumer Financial Protection Bureau examinations.
Cole said even if the bill passes, stress tests are here to stay, because they are a "reliable, widespread tool" for risk management.
"If we were to get rid of the mandatory DFAST, stress testing is still something that has become...