Should we tailor the way banks are regulated based on risk?
Bill Summary
This bill amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to regulate banks based on actual risk posed to the financial system rather than asset size alone. Sponsor: Rep. Luetkemeyer, Blaine [R-MO-3]
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Opponents say
• This legislation increases the likelihood of big bank failures that could put the economic security of millions of families at risk by placing new constraints on the ability of the Federal Reserve to provide oversight of large bank holding companies.
• This bill will lead to the politicization of bank regulatory decisions as it grants the Treasury Secretary new powers to pick and choose which big banks must follow basic safety rules.
• This bill will lead to the politicization of bank regulatory decisions as it grants the Treasury Secretary new powers to pick and choose which big banks must follow basic safety rules.
Proponents say
• “This legislation supports economic growth throughout the country because it will free commercial banks to make loans while allowing financial regulators the ability to apply enhanced standards on banks based on actual risk posed to the financial system – rather than on arbitrary asset size alone” - Rep. Luetkemeyer
• Currently, there is an arbitrary asset threshold ($50 billion) for granting financial institution a systemically important status (SIFI), whereby all institutions over a certain size are subject to very similar regulatory and supervisory standards. This lack of nuance is ineffective -- we need more individually tailored supervision regimes, which this bill supplies.
• Currently, there is an arbitrary asset threshold ($50 billion) for granting financial institution a systemically important status (SIFI), whereby all institutions over a certain size are subject to very similar regulatory and supervisory standards. This lack of nuance is ineffective -- we need more individually tailored supervision regimes, which this bill supplies.
