U.S. Sens. David Perdue (R-GA) and Claire McCaskill
(D-MO) recently supported legislation to exempt banks not designated as Globally Systemically Important Banks from reporting requirements and merger and acquisition limitations imposed by the Dodd-Frank.
Currently, any financial institution with $50 billion in assets faces stronger capital requirements and other regulations. This bill, the Systemic Risk Designation Improvement Act, 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.
“Regional banks offer a lifeline to small businesses and entrepreneurs looking to create jobs,” Perdue said. “Dodd-Frank overregulated these banks by placing them into the same category as huge banks with a global reach. This sent these banks’ compliance costs through the roof and limited their ability to do what they do best—support their communities. This legislation would actually test banks for systemic risk rather than forcing banks to comply with an arbitrary figure.”
McCaskill said even some of the architects of Dodd-Frank say the law is unnecessarily burdensome on regional banks.
“This is a commonsense fix that’ll untie the hands of our small regional banks and return to them the flexibility to lend to Missouri customers who want to buy a house, or start a business,” McCaskill said.