Community banks welcome Volcker relief, but won't go unsupervised

Author: John Crabb | Published: 29 Jul 2019

The community banking sector of the US financial system is celebrating a victory as provisions to remove compliance with the Volcker rule came into effect last month. Introduced as part of bill S.2155, the Economic Growth, Regulatory Relief and Consumer Protection Act, also known as the Crapo Bill, means that banks with under $10 billion in total assets and total trading assets and liabilities of five percent or less of total consolidated assets are now exempt from Volcker compliance.

Seen as something of a burden for banks of this size, largely community banks, the move removes a serious compliance headache for a part of the industry that was not active in proprietary trading to a level deemed nearly as risky as other players.

However, it does not mean that these banks will be able to act unperturbed going forward. They will still be monitored by banking regulators under normal...