The bill seeks to enforce the law that is already on the books. In 1996, Congress passed legislation requiring that one FDIC Board member “shall have State bank supervisory experience.”
However, currently, and for the past several years, this legal requirement has not been met.
The State Regulatory Representation Clarification Act clarifies the current law, making clear that the FDIC Board must include at least one member who worked in state government as a state bank supervisor. The Senate bill (S.1910) was sponsored by Sens. Orrin Hatch (R-UT) and Mazie Hirono (D-HI), while the House version (HR 3915) was introduced by Reps. Frank Lucas (R-OK) and Denny Heck (D-WA).
The Conference of State Bank Supervisors (CSBS) commended the bill.
“State bank regulators provide a unique perspective on how banking services affect local communities. State regulators – who charter and supervise 78 percent of all U.S. banks — are mandated to ensure the safety and soundness of these banks, protect consumers, and support the economic health of their communities,” CSBS President and CEO John Ryan said.
Ryan said these bills affirm that the state perspective is crucial to creating effective bank regulation.
“Congress, over 20 years ago, mandated that the FDIC Board include an individual with experience as a state banking regulator. Since then, Congress has repeatedly affirmed and expanded the role state regulators play in America’s diverse financial services ecosystem,” Ryan said.