U.S. Sens. Mike Rounds (R-SD), Cynthia Lummis (R-WY), and Tim Scott (R-SC) introduced legislation that would require federal regulatory agencies to take risk profiles and business models of institutions into account when crafting regulations.
The bill — the Taking Account of Institutions with Low Operation Risk, or TAILOR, Act – is designed to reduce the compliance burden on small banks and credit unions. Specifically, it says that federal regulatory agencies would have to consider the risk profiles and business models of individual financial institutions and shape those regulations accordingly. They would also have to outline in a report to Congress the steps they have taken to adjust their regulations.
“Financial institutions across South Dakota have been negatively impacted by burdensome, unnecessary regulations due to disproportionate compliance costs,” Rounds said. “These costs are ultimately passed down to consumers. The TAILOR Act would ease the regulatory burden on smaller financial institutions so they can focus resources on taking care of their customers, rather than spending time and money on compliance. I look forward to working with my colleagues on this important legislation, so our smaller financial institutions are better able to meet the needs of families and local businesses.”
Federal regulatory agencies include the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Consumer Financial Protection Bureau.
“Wyoming banks have long been burdened by unnecessary regulation,” Lummis said. “The TAILOR Act would require federal banking regulators to consider a community bank’s business model, risk profile, and size when regulating it. This would simplify the federal rules that are currently straining dozens of banks in Wyoming. Community banks are a backbone of Wyoming’s financial system, and I’m proud to work with my colleagues Mike Rounds and Tim Scott to support them.”
Further, the TAILOR Act would require regulators to review all the regulations issued by the agencies since the 2010 passage of the Dodd-Frank Act. If the review finds that the regulations issued since 2010 do not conform to the TAILOR Act, the agency would be required to revise the regulations.
“By cutting red tape and changing regulators’ one-size-fits-all approach to rulemaking, the TAILOR Act will allow community banks and credit unions to better use their resources to impact the communities they serve,” Scott said. “Whether it’s providing mortgages, small business loans, or consumer credit, we need to make it easier for these local institutions to do business, create wealth, and spur economic growth.”
Finally, the TAILOR Act directs regulatory agencies to reduce burdensome reporting requirements for community banks.