The 114 th Congress is considering legislation to provide "regulatory relief" for banks. The need for such relief, some argue, results from the increased regulation that was applied in response to vulnerabilities that became evident during the financial crisis that began in 2007. In the aftermath of the crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), a wide-ranging package of regulatory reform legislation, was enacted. Bank failures spiked during the crisis, and changes to banking regulation were a key part of financial reform. As financial regulators have implemented the Dodd-Frank Act and other reforms, some in Congress claim that the pendulum has swung too far toward excessive regulation. They argue that the additional regulation has resulted in significant costs that have stymied economic growth and restricted consumers' access to credit. Others, however, contend the current regulatory structure has strengthened financial stability and increased protections for consumers. They are concerned that regulatory relief for banks could negatively affect consumers and market stability. This report assesses banking regulatory relief proposals contained in bills that have been marked up by committee or have seen floor action in the 114 th Congress. In the House, proposals had generally been considered individually in separate bills until September 2016, when many of these bills were combined with new provisions in the Financial CHOICE Act ( H.R. 5983 , FCA). In the Senate, proposals have been combined into one legislative package, the Financial Regulatory Improvement Act ( S. 1484 / S. 1910 ). For more information on these two comprehensive regulatory relief packages, see the text box below. Several proposals were also included in the version of H.R. 22 , the Fixing America's Surface Transportation Act, which was signed into law as P.L. 114-94 on December 4, 2015. Because banks are involved in many different activities, this report does not address all regulatory relief proposals that would affect each aspect of a bank's business (e.g., it does not cover proposals affecting banks' involvement in areas such as derivatives) but focuses on those proposals that address the traditional areas of banking, such as taking deposits and offering loans. Although many of the proposals would modify regulations issued after the crisis, some would adjust policies that predated the financial crisis and some proposals are characterized as technical fixes. Further, the report covers only the regulatory relief banking legislation that has seen legislative action. The proposals discussed in this report vary with regard to the type of relief, including to whom relief would be provided and the manner in which it would be provided. For organizational purposes, this report classifies regulatory relief proposals into the categories of safety and soundness, mortgage and consumer protection, supervision and enforcement, or capital issuance. For each proposal, the report explains what the bill would do and the main arguments offered by its supporters and opponents. In assessing whether regulatory relief is called for or whether a regulation has not gone far enough, a central question is whether an appropriate trade-off has been struck between the benefits and costs of regulation. The different objectives and potential benefits of financial regulation include enhancing the safety and soundness of certain institutions; protecting consumers and investors from fraud, manipulation, and discrimination; and promoting financial stability while reducing systemic risk. The costs associated with government regulation are referred to as regulatory burden . The presence of regulatory burden does not necessarily mean that a regulation is undesirable or should be repealed. A regulation can have benefits that could outweigh its costs, but the presence of costs means, tautologically, that there is regulatory burden. Regulatory requirements often are imposed on the providers of financial services, so banks frequently are the focus of discussions about regulatory burden. But some costs of regulation are passed on to consumers, so consumers also may benefit from relief. Any benefits to banks or consumers of regulatory relief, however, would need to be balanced against a potential reduction to consumer protection and to the other benefits of regulation. The concept of regulatory burden can be contrasted with the phrase unduly burdensome . Whereas regulatory burden is about the costs associated with a regulation, unduly burdensome refers to the balance between benefits and costs. For example, some would consider a regulation to be unduly burdensome if costs were in excess of benefits or the same benefits could be achieved at a lower cost. But the mere presence of regulatory burden does not mean that a regulation is unduly burdensome. Policymakers advocating for regulatory relief argue that the regulatory burden associated with certain regulations rises to the level of being unduly burdensome for banks, whereas critics of those relief proposals typically believe the benefits of regulation outweigh the regulatory burden. As relief proposals for banks are debated, a useful framework to categorize proposals includes assessing to whom relief would be provided and how relief would be provided. Relief could be provided either to all banks to which a regulation applies or to only a subset of banks based on size, type, or the activities the banks perform. The perceived need for relief for small banks has been emphasized in the 114 th Congress, and Table 1 summarizes legislative proposals in this report that have a size threshold. Often in the regulatory relief debate, small banks are characterized as "community banks," although there is no consensus on what size threshold divides small banks from large or what are the defining characteristics of a community bank. Regulatory relief can be provided in different forms, including by repealing entire provisions, by providing exemptions from specific requirements, or by tailoring a requirement so that it still applies to certain entities but does so in a less burdensome way. Examples of different forms of tailoring are streamlining a regulation, grandfathering existing firms or types of instruments from a regulation, and phasing in a new regulation over time. Modifications can be made to regulations stemming from statutory requirements, regulatory or judicial interpretations of statute, or requirements originating from regulators' broad discretionary powers. Typically, in the area of financial regulation, Congress sets the broad goals of regulation in statute and leaves it to regulators to fill in the details. Many of the legislative proposals analyzed in this report, however, would make changes to specific details of the regulation that regulators have issued. Thus, some may oppose such proposals on the grounds that Congress is overriding regulator discretion and lacks the expertise to properly make detailed, technical regulatory judgments. In some cases, Congress might nevertheless determine that narrow intervention is justified because regulators have misinterpreted its will or are not considering other relevant policy objectives. The goal of safety and soundness (or prudential) regulation is to ensure that a bank maintains profitability and avoids failure. The rationale for safety and soundness regulation is to protect taxpayers (who backstop federal deposit insurance) and to maintain financial stability. Regulators monitor the bank's risk profile and set various metrics that banks must maintain in areas such as capital and liquidity. After the spike in bank failures surrounding the crisis, many of the reforms implemented in the wake of the financial crisis were intended to make banks less likely to fail. Whereas some view these efforts as essential to ensuring the banking system is safe, others view the reforms as having gone too far and imposing excessive costs on banks. Under Title I of H.R. 5983 , a banking organization that has received high ratings on recent examinations could choose to be subject to a higher, 10% leverage ratio. In exchange for choosing to be subject to the 10% leverage ratio, banks would be exempt from risk-weighted capital ratios; liquidity requirements; certain merger, acquisition, and consolidation restrictions; limitations on dividends; and other regulations. A bank would have the option to follow current regulatory requirements or this new regulatory approach. Some of the regulations from which a bank could receive relief are regulations that apply to all banks, such as the risk-weighted capital ratios. Other regulations from which a bank could receive relief under the FCA would only apply to larger banks (with an asset threshold of $50 billion to $700 billion, depending on the provision). For example, banks opting in to the new leverage ratio approach would be exempt from the Dodd-Frank Act's Section 165 enhanced prudential regulations except for stress tests and other regulations based on financial stability considerations. The enhanced regulatory regime can include capital standards, liquidity standards, counterparty limits, risk-management standards, and "living will" requirements. Regulators would still have authority to conduct stress tests on banks with over $50 billion in assets (but would no longer have the authority to require company-run stress tests for banks with between $10 billion and $50 billion in assets) that opted for the new regulatory approach but would be limited in their ability to require them to alter their capital levels. Background. With more than 500 banks failing between 2007 and 2014, strengthening prudential regulation has been a major goal of post-crisis financial reforms. Prudential regulation covers a broad set of a bank's activities, including assessing whether a bank will be able to meet its obligations during a market downturn, evaluating the quality of its assets and management team, and other factors. One of the main areas of focus is bank capital adequacy. Capital is the difference between the value of a bank's assets and its liabilities and is an indicator of a bank's ability to absorb losses. If a bank has $100 worth of assets and $90 of liabilities, then the bank has capital of $10. If the value of the assets decreases by $5 to $95 and the bank still has $90 in liabilities, then the $5 decline in asset value would be absorbed by the capital, which would decrease from $10 to $5. Capital is often measured as the ratio of capital to the bank's assets. A 10% capital ratio, for example, would imply $10 of capital for every $100 of assets. Banks are required to satisfy several different capital ratios, but the ratios fall into two main categories: (1) a leverage ratio and (2) a risk-weighted asset ratio. Failure to satisfy the required ratios could lead to regulators taking corrective action against a bank, including ultimately shutting the bank down.