February 20 – Federal regulatory agencies would be required to take risk profiles and business models of institutions into account when crafting regulations, in a new bill introduced by Sen. Mike Rounds, R-S.D., a member of the Senate Banking Committee. Rounds also introduced a bill to defund the Consumer Financial Protection Bureau.
Rounds reintroduced the Taking Account of Institutions with Low Operation Risk Act, noting that excessive costs and regulatory hurdles continue to hurt consumers the most. The TAILOR Act would ease the regulatory burden on smaller financial institutions so they can focus their resources on taking care of their customers, rather than spending time and money on compliance, the costs of which are ultimately passed on to the consumer, according to Rounds.
The TAILOR Act would require regulatory agencies, such as the Office of the Comptroller of the Currency, the Federal Reserve Board, the FDIC, the National Credit Union Administration and the CFPB, to take into consideration the risk profile and business models of individual financial institutions and tailor those regulations accordingly. Additionally, the bill requires the regulatory agencies to provide an annual report to Congress outlining the steps they have taken to tailor their regulations.
The TAILOR Act also requires regulators to conduct a review of all the regulations issued by the agencies since the 2010 passage of the Dodd-Frank Act. If the review finds that the regulations issued since 2010 do not conform to the TAILOR Act, the agency would be required to revise the regulations.
ABA strongly supports the TAILOR Act of 2017, according to James Ballentine, ABA executive vice president of congressional relations. Ballentine described the act as “commonsense legislation.”
“While regulation is a fact of life for banks, indiscriminately applying rules to institutions whose business models and risk levels don’t warrant it serves only to increase costs and cut the number of financial products and services available to consumers,” Ballentine said. Regulators should be empowered – and directed – to make sure that rules, regulations and compliance burdens only apply to segments of the industry where warranted.
The House Financial Services Committee passed a similar bill in 2016 with a bipartisan majority, Ballentine noted. “Reintroducing the TAILOR Act, is an important step, and we look forward to working with lawmakers on both sides of the aisle once again to advance this much-needed legislation,.” he said.
Rounds’ second bill would cripple the CFPB by eliminating its funding stream from the Federal Reserve.
“A product of the ill-advised Dodd-Frank Reform Act, the CFPB is an unaccountable regulatory agency ran by unelected bureaucrats with no oversight from Congress,” said Rounds. “No unchecked federal agency should have the power to dramatically alter the financial choices of consumers through the rules it promulgates. Dismantling the CFPB is but one step we can take to ease the regulatory burdens of Dodd-Frank, the cost of which continues to be handed down to American families. I look forward to working with my colleagues to roll back the CFPB’s power and prevent the agency from imposing any further harmful regulations.”
Rounds’ legislation amends the Consumer Financial Protection Act to bar the transfer of funds from the Federal Reserve Board to the CFPB. The bill also requires the CFPB to turn over all penalty funding and other money it has received to the Treasury Department.