The U.S. House of Representatives advanced a couple of bills this week targeted at banks – one to amend stress test requirements and another to reform the designation process for nonbank financial institutions.
The Stress Test Improvement Act of 2017 (H.R. 4293), sponsored by Rep. Lee Zeldin (R-NY), would streamline the process for stress testing banks. Specifically, it would make the company-run stress test an annual exercise and reduce the number of supervisory scenarios from three to two. The bill would also limit the ability for the Federal Reserve to object to a company’s capital plan based on qualitative deficiencies. This bill passed 245-174.
The Financial Stability Oversight Council Improvement Act of 2017 (H.R. 4061), sponsored by Rep. Dennis Ross (R-FL), would reform the Financial Stability Oversight Council (FSOC) process to designate nonbank systemically important financial institutions (SIFI). The bill would afford the impacted institutions a greater opportunity to be heard by the functional regulator and modify its business, structure, or operations prior to designation. FSOC, however, retains the power to make a determination regarding any nonbank financial company. The bill passed by a vote of 297-121.
“At the end of the day, it’s not really the banks that are the subject of these regulations. At the end of the day, it’s their customers,” Financial Services Committee Chairman Rep. Jeb Hensarling (R-TX). “What the Financial Services Committee and this House has to do is ensure that there is affordable and available credit to help fund people’s American dreams. That’s what these important bipartisan bills will help achieve.”