WASHINGTON – The House Financial Services Committee announced today that it will markup H.R. 1309 – The Systemic Risk Designation Improvement Act of 2015 – on Tuesday, November 3. This bipartisan legislation, introduced by Rep. Blaine Luetkemeyer and co-sponsored by 112 members representing both parties, would base the regulation of financial institutions on risk rather than arbitrary asset size.
In response, William Moore, the Executive Director of the Regional Bank Coalition issued the following statement:
“The Regional Bank Coalition strongly supports the Systemic Risk Designation Improvement Act of 2015, bipartisan legislation that would allow regulators to focus on banks that pose the greatest risk to the financial system, while improving the ability of regional banks to increase lending in their communities. Regional banks’ focus and footprint is not on Wall Street, but on Main Street, and this bill would allow them to improve Main Street economies across the country.
“Congressman Luetkemeyer’s legislation would replace the automatic and arbitrary $50 billion total asset threshold currently used to designate banks as systemically important with a multi-factored test already used by the regulatory agencies for other purposes that measures the actual potential systemic risk a bank presents. This criteria, focusing on complexity, global activity, size, interconnectedness, and substitutability, is widely accepted among regulators and academics as a more appropriate and more nuanced indication of whether a bank is systemically important than the $50 billion total asset threshold currently used.
“A Federal Financial Advisors economic study earlier this year detailed that a revision of the systemic risk threshold to base regulation on risk instead of an arbitrary asset number could increase lending to consumers and businesses by as much as $14 to $20 billion.
“Our regional banks look forward to the committee’s markup and to discussing the need to ensure small businesses and consumers across the nation have access to the capital they need to succeed.”
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.