Legislation introduced by U.S. Sen. Mike Rounds (R-SD) on Monday aims to ease the regulatory burden faced by local banks and credit unions.
Under the Taking Account of Institutions with Low Operation Risk (TAILOR) Act, S. 3153, federal regulatory agencies would be directed to consider the risk profiles and business models of financial institutions when drafting new regulations.
Smaller financial institutions have been negatively impacted by unnecessary regulations handed down by the Dodd-Frank Act of 2010, Rounds said, which creates disproportionate compliance costs.
“These disproportionate costs and regulatory hurdles have hurt consumers the most,” Rounds said. “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 regulatory compliance. This will allow them to better meet the needs of families and local businesses, which will in turn lead to a stronger economy and healthier communities across the state.”
Federal entities like the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corp., the National Credit Union Administration and the Consumer Financial Protection Bureau would be required to complete risk profiles of individual financial institutions.
Regulatory agencies would also be required to review all regulations and to report to Congress annually on steps taken to tailor regulations.
“South Dakota is home to some of the smallest and the largest banks in the world, with wide variations in their business models,” Curt Everson, the president of the South Dakota Bankers Association, said. “Bankers from those institutions agree that today’s one-size-fits-all regulatory scheme doesn’t make sense. We applaud Senator Rounds for introducing the TAILOR Act to start the conversation about matching bank regulation to risk.”