A long-awaited change regarding the regulatory demands of banks over the certain asset size, could be raised very soon, which might in turn open regional banks up to increase their lending potential.

Several years in the making, Rep. Blaine Luetkemeyer’s bill to increase the minimum asset level under which a bank is considered “systemically important” is likely to be voted on this week by the House of Representatives. Given the speculation that the Trump administration is likely propose additional changes to the Dodd Frank act, might pave the way for this one to pass.

Essentially, the measure is aimed at getting community and regional banks regulatory relief. The Dodd-Frank reforms that came about from the financial crisis put the level for intensified regulation at $50 billion in assets, a metric that Republicans and small-bank advocates say is too low, and which therefore places too many smaller banks under the same level of scrutiny as the Wall Street giants.

This could be a big boon to the economy and especially the mortgage and housing industry, as the access to credit is one of the biggest issues consumers face. I have seen an imbalance in the market for 4 years now as mortgages are predominantly funded by the big banks or ultimately backed by Fannie and Freddie and sold on the secondary market. It is also widely agreed the lending for small businesses has been difficult thereby handicapping business owners and entrepreneurs.

Allowing the regional banks to lend more can add more depth and credit availability to the marketplace.

“The rebirth of regional banking is actually quite strong, and to induce banks to be making loans to small and medium-sized businesses is actually a growth area,” Cowen and Co. CEO Jeff Solomon told CNBC’s “Squawk on the Street.” “I think anytime you can get more liquidity into the marketplace for growing businesses, [it] helps economic growth.”

Beau Hodson

Beau Hodson

About the Author Since 2003, Beau has been a mortgage professional and is a leading mortgage broker and lender in San Diego. As Founder and Senior Mortgage Advisor at Transparent Mortgage, he is truly committed to serving the needs of his clients and raising industry standards for integrity and transparency.