WASHINGTON (September 28, 2017) – Today, the Regional Bank Coalition (RBC) announced support for the Systemic Risk Designation Improvement Act of 2017 sponsored by Sens. McCaskill (D-MO) and Perdue (R-GA). The bill is the Senate counterpart to H.R. 3312, bipartisan legislation introduced by Rep. Blaine Luetkemeyer (R-MO), which would use a bank’s full business profile to determine its risk level to the financial system and the appropriate amount of regulation needed to ensure safety and soundness.
Currently, the Dodd-Frank Act mandates a one-size-fits-all approach that deems all banks above $50 billion as holding greater risk, despite regional banks operating in a more traditional manner than their Wall Street counterparts. Both the House and Senate bills move away from determining banking regulations solely on an asset threshold and toward a multi-factored system that accounts for differences between institutions.
“Using an arbitrary, static asset threshold is an outdated way to apply regulations for financial institutions, especially given all the work the Federal Reserve has done over the last several years to develop better methods to track systemic risk. The Systemic Risk Designation Improvement Act of 2017 employs these methods and stands as the most thorough, data-driven method of regulating financial institutions, which has been proven to accurately capture an institution’s risk level,” said Matt Well, spokesperson for the Regional Bank Coalition (RBC). “We need a system that ensures the safety and soundness of the financial system and supports much needed economic growth through consumer and business lending.”
Regional banks play a critical role in their communities, serving as the backbone of economic growth by providing loans and other banking services to Main Street businesses. The current regulatory system makes it difficult for regional banks to best serve their Main Street customers.
The 2016 version of the bill, which had five Republican and four Democratic cosponsors, passed the House in December 2016 by a 254-161 vote—including 20 Democratic yeas.
In April, RBC submitted a proposal to Senate Banking Chairman Crapo (R-ID) and Ranking Member Brown (D-OH) endorsing the use of a multi-factored approach to properly calibrate regulations for banks.
For more information on the Regional Bank Coalition’s position, click here.
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