WASHINGTON – Senate Banking Committee Chairman Richard Shelby released draft banking reform legislation today. Included in that legislation is a provision that would change the $50 billion threshold at which banks are designated for enhanced systemic regulation while allowing the Financial Stability Oversight Council the flexibility to continue enhanced regulation for any banks that regulators find do pose systemic risk to the economy.
In response, William Moore, the Executive Director of the Regional Bank Coalition, issued the following statement:
“Chairman Shelby’s draft legislation would make important adjustments to the nation’s financial regulatory regime to preserve safety and soundness, improve the economy, and enhance regulators’ ability to address those financial institutions that pose the greatest risk to the economy. If this bill passes, regional banks that are currently spending hundreds of millions of dollars every year to comply with rules that do nothing to preserve safety and soundness would instead be able to devote that money to improving the economy through loans to families and small businesses in communities across the country.
“In the five years since Dodd-Frank passed, regulators have developed more sophisticated methods to measure systemic risk than the artificial $50 billion threshold contained in the law, and this legislation catches the rules up to reality. The Treasury Department has recently shown in a comprehensive analysis that regional banks pose no systemic threat to the economy. This bill recognizes that fact, while also providing authority to tailor regulation for firms with specified systemic characteristics.
“Furthermore, under this legislation, the Federal Reserve would retain important safety and soundness authorities for all institutions, regardless of size. And by freeing regulators from dedicating time and energy on banks that pose no systemic risk to the economy, Chairman Shelby’s bill allows them to focus their efforts on those institutions that do pose ongoing threats.
“A diverse group of officials including former House Banking Chairman Barney Frank, former Federal Reserve Chairman Ben Bernanke and Federal Reserve Governor Daniel Tarullo have already come out in support of changing the threshold. We applaud Senator Shelby for his leadership and hope other members of the committee will join him in supporting this important legislation.”
About the Regional Bank Coalition: The Regional Bank Coalition is a group of regional banks that support regulation based on risk and business model to ensure safety and soundness. For more information, visit www.regionalbanks.org or follow on Twitter @rgnlbanks.