The Senate passed a banking bill meant to roll back some of the financial regulations imposed after the crisis, but its fate is uncertain in the House; Republicans in the House want a further rollback of regulations; the bill is intended to help smaller banks avoid burdensome federal oversight and raises the definition of systemically important to $250bn from $50bn; the bill also makes adjustments to parts of the Volcker Rule and eases mortgage rules for smaller lenders. Source.
The Volcker Rule was enacted in the aftermath of the 2008 financial crisis to prohibit banks from some of their riskiest activities; the rule is having a damaging effect when it comes to smaller banks who wish to work with fintech companies; according to the rule, banks cannot engage in proprietary trading and it limits banks from making investments in hedge and equity funds; smaller banks like community banks and credit unions don't have the resources of big banks to build out new technology so they look to partner with fintech firms; the limitations force these banks to invest in individual companies rather than funds who could potentially invest in a portfolio of companies; policy makers are looking toward Volcker Rule adjustments and the OCC recently signaled changes could be coming soon; while regulation has helped to curb abusive practices in financial services it would help to tailor legislation in a more specific fashion. Source