WASHINGTON — State bank associations threw their support behind a regulatory relief bill on Tuesday in hopes the legislation can gain traction in the Senate.
The bill introduced in July by Sen. Mike Rounds, R-S.D., would require federal financial regulators to consider a bank's business model when implementing new regulations and guidance. The Taking Account of Institutions with Low Operation Risk would also require regulators to do a look-back at Dodd-Frank Act regulations and determine if they are overly burdensome and harming financial institutions' ability to serve their customers.
"Financial institutions, particularly community banks, have been besieged by an avalanche of regulations coming out of the financial crisis," said a letter from all 52 state bankers associations to Senate lawmakers. "While many of those new rules address legitimate concerns, they often are applied in indiscriminate fashion, imposing substantial burdens on institutions whose risk profiles and business models clearly do not warrant such application."
If passed, the legislation would also require regulators to document how new rules take into account a bank's business model and the consumer impact of the regulation.
A House version of the bill passed out of the Financial Services Committee in March, but Democratic lawmakers, including Rep. Maxine Waters, the lead Democrat on the panel, expressed concern about the legislation.
"The TAILOR Act, I believe, is a bold attack on the Dodd-Frank financial reform law," Waters said at the time. "This bill would allow every bank and financial institution overseen by agencies like the Federal Deposit Insurance Corp. or the Consumer Financial Protection Bureau to challenge rulemakings in court if they felt a regulation was not uniquely tailored to their business needs."
But the bank associations said the legislation does more than just help institutions cope with new regulations and requirements.
"In the end, the primary losers of this never-ending cycle are the people and communities served by our nation's banks, as these institutions are the life blood that drives economic growth, jobs and well-being in thousands of towns and cities across this country," the letter said.