The Consumer Bankers Association (CBA) voiced their support for legislation sponsored by Sens. Claire McCaskill (D-MO) and David Perdue (R-GA) that would exempt some banks not designated as systemically important from Dodd-Frank reporting requirements.
Currently, any financial institution with $50 billion in assets is deemed systemically important and faces stricter capital requirements and other regulations. This bill, the Systemic Risk Designation Improvement Act (S. 1893), is designed to give the Federal Reserve flexibility when making systemic risk designations. It would effectively free many regional banks from these requirements. The criteria would not include just asset size, but other factors as well, such as interconnectedness, substitutability, global cross-jurisdictional activity, and complexity.
“Designating risk based on how big a financial institution is does not make sense and it hurts consumers,” CBA President and CEO Richard Hunt wrote in a letter to the bill’s sponsors. “This legislation allows regulators to take a big-picture view of risk by looking at the activities a financial institution undertakes instead of a simple assets threshold. Examining multiple risk factors is more telling and can reduce unnecessary compliance burdens that limit credit availability to consumers.”
Similar legislation sponsored by Rep. Blaine Luetkemeyer (R-MO) passed the U.S. House of Representatives last year.
“CBA strongly supports S. 1893 and encourages the Senate to pass this important legislation,” Hunt wrote.