U.S. Rep. Frank Lucas (R-OK) on Friday praised the Federal Reserve Board’s final rules to reduce compliance requirements for firms with less risk while maintaining stringent requirements for the largest and most complex banks.
“I applaud the Federal Reserve Board’s actions in developing a regulatory framework that more closely fits an individual bank’s business model allowing for institutions to better serve our growing communities,” Rep. Lucas said.
The Federal Reserve Board on Oct. 10 issued final rules that tailor its regulations for domestic and foreign banks to more closely match their risk profiles and establish a framework that sorts banks with $100 billion or more in total assets into four different categories.
“Ensuring that our financial institutions are guided by tailored regulatory requirements rather than a stringent one-size-fits-all approach not only better serves a bank’s customers, but it also promotes economic growth in communities across the nation,” said the congressman.
The board said its new framework is based on several factors, including asset size, cross-jurisdictional activity, reliance on short-term wholesale funding, nonbank assets, and off-balance sheet exposure.
“Firms in the lowest risk category will have reduced compliance requirements, owing to their smaller risk profile. As the risk of a firm increases and it moves into a new risk category, its requirements will increase,” according to the board, which said the rules also build on its “existing practice of tailoring its requirements and are consistent with changes made by the Economic Growth, Regulatory Relief, and Consumer Protection Act.”
Rep. Lucas noted that since the passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act, S. 2155, he and his colleagues “have made clear that right-sizing burdensome regulations should remain a priority.”
“Today’s action by the Federal Reserve Board improves supervision by appropriately regulating institutions based off their risk, while effectively applying financial stability rules on an asset-sized basis,” he said.