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The Federal Reserve could broaden the number of banks receiving regulatory relief from Trump-appointed officials under an initiative that changes how it defines a big bank, the Wall Street Journal reported. As part of a series of rule changes still under development, the Fed is preparing to revise asset-size and other thresholds in its capital and liquidity rules. The changes could lead to lower regulatory costs for some large U.S. banks, including Capital One Financial Corp., PNC Financial Services Group Inc. and U.S. Bancorp. It is less clear that the changes will help gigantic firms the Fed considers “systemically important” to the global financial system, such as Citigroup Inc. and Goldman Sachs Group Inc. Likely candidates for the rule changes include the liquidity coverage ratio, which requires banks to hold assets they can easily convert to cash in a pinch, and “advanced approaches” rules, one of several capital regulations that limit banks’ borrowing. Fed Vice Chairman for Supervision Randal Quarles, who is set to testify today before the Senate Banking Committee, has previously said those rules are worth revisiting. Read more. (Subscription required.) 

For more information on the Senate Banking Committee's hearing titled, “Implementation of the Economic Growth, Regulatory Relief, and Consumer Protection Act," please click here. 

The House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law will hold a hearing on Wednesday at 10 a.m. EDT to consider H.R. 3553, the “Bankruptcy Administration Improvement Act of 2017.” The bill was introduced last year by House Judiciary Subcommittee Chair Tom Marino (R-Pa.) and aims to increase the amount of compensation paid to chapter 7 bankruptcy trustees for services rendered. Ariane Holtschlag of the Law Office of William J. Factor, Ltd. (Chicago) and a member of ABI’s Commission on Consumer Bankruptcy will testify to provide Commission recommendations on trustee compensation. While the Commission is working on a report of recommendations for improving the overall consumer bankruptcy system, to be published at ABI’s 2019 Annual Spring Meeting, it completed deliberations on the issue of chapter 7 trustee compensation. Others scheduled to testify include Bankruptcy Judge Alan C. Stout (W.D. Ky.; Louisville), Clifford J. White III, Director of the U.S. Trustee Program (Washington, D.C.) N. Neville Reid of Fox Swibel Levin & Carroll LLP and John Rao of the National Consumer Law Center (Boston).

Reforms made in response to the bankruptcy of Lehman Brothers in 2008 won’t prevent a repeat, experts told MarketWatch.com. As the 10th anniversary of the Sept. 15, 2008, bankruptcy of investment bank Lehman Brothers approaches, MarketWatch looked at whether the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 and other reforms will prevent another financial crisis if there’s a failure of a non-bank financial institution like Lehman. MarketWatch looked at two areas of reform resulting from Lehman’s bankruptcy and the effect the failure had on the financial crisis: the new Dodd-Frank orderly resolution authority that replaced bankruptcy for “too big to fail” banks, and the elimination by accounting standard setters of the loophole that enabled the use of Repo 105, an accounting technique Lehman used that also allowed balance sheet “window dressing.” Anton Valukas, the Lehman bankruptcy examiner, wrote in 2010 that determining whether the bankruptcy filing made the financial crisis worse was beyond the scope of his investigation. However, what happened next suggests the Lehman bankruptcy filing had a significant impact on the depth of the crisis. Read more. 

In related news, almost all of the mandatory provisions of the law had been finalized by the Securities and Exchange Commission by the end of 2015, five years after the passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010. The executive compensation-related provisions of the Dodd-Frank Act were “designed to address shareholder rights and executive compensation practices,” according to the text of the law, MarketWatch.com reported. But 10 years after the failure of Lehman Brothers, and eight years after the passage of the reform law, five of 12 mandatory executive compensation rules remain to be approved by the Securities and Exchange Commission. Read more. 

House Ways and Means Committee Chairman Kevin Brady (R-Texas) said yesterday that he intends for his panel to consider a second round of tax cuts next week, The Hill reported. Brady released an outline of "tax reform 2.0" before the August recess and said he plans to release legislative text early next week. The outline of the package had three components: making the individual tax cuts in the 2017 tax law permanent, providing incentives for taxpayers to save money, and providing incentives for business innovation. "It's full steam ahead on 2.0 because the main question here is, will we make tax cuts for families and small businesses permanent as we did for corporations? The answer is yes," Brady said. The tax changes for individuals in the 2017 law are currently set to expire after 2025, while the tax cuts for corporations are permanent. The individual tax cuts were made temporary because lawmakers wanted to comply with budget rules that allowed the measure to pass the Senate without any support from Democrats. The House is scheduled to be in recess for much of October so that lawmakers can campaign for the midterm elections, and lawmakers will also have a number of other issues to tackle in September.