Why Mnuchin thinks changes to Dodd-Frank will pass soon

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BEVERLY HILLS, Calif. – U.S. Treasurer Steven Mnuchin thinks Congress could agree within two months on changes easing the Dodd-Frank regulations that were put in place following the 2008 banking crisis.

The legislation could boost the municipal bond market if it includes a section allowing banks to count some munis as high quality liquid assets.

Mnuchin, during remarks at the Milken Institute Global conference here, called the proposed loosening of the regulations “important legislation” that is bipartisan.

“This should get done now,” Mnuchin said. “I am hopeful it could get done in the next 30 to 60 days.”

During his remarks earlier in the day, U.S. House Majority Leader Kevin McCarthy, R-Calif., said the House could vote in May on the bill.

The House and Senate are currently in conference to work out differences on the bill, McCarthy said.

The Senate voted 67-32 in favor of S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act, authored by Idaho Sen. Mike Crapo, chairman of the Senate Banking committee.

The bill would reduce regulations for small and mid-sized banks and also also allow banks to count some municipal bonds among their high-quality assets, which would alleviate a situation that some market participants have said has hurt demand for munis.

Requirements adopted in 2014 Federal Reserve Board, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Co. require that banks with at least $250 billion of total assets or consolidated on-balance sheet foreign exposures of at least $10 billion have a high enough liquidity coverage ratio to deal with periods of financial stress.

Munis were not included as HQLA, because regulators believed they did not meet the liquidity requirements.

The Fed later amended the rules, but some muni market participants felt the changes did not go far enough.

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Dodd-Frank Liquidity requirements Secondary bond market California Washington DC