Two bills introduced this week by U.S. Sen. Mike Rounds (R-SD) would require agencies to consider risk profiles when drafting financial regulations and dismantle the Consumer Financial Protection Bureau (CFPB).
The Taking Account of Institutions with Low Operation Risk (TAILOR) Act would require regulatory agencies like the Office of the Comptroller of the Currency, the National Credit Union Administration and the CFPB to take business models and risk profiles of individual financial institutions into account when crafting regulations.
“Financial institutions across South Dakota have been negatively impacted by burdensome, unnecessary regulations because of disproportionate compliance costs since the passage of the Dodd-Frank Act in 2010,” Rounds said.
“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 onto the consumer in South Dakota,” Rounds added.
Regulatory agencies also would be required to report to Congress annually on steps being taken to adapt financial 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 Sen. Rounds for introducing the TAILOR Act to start the conversation about matching bank regulation to risk.”
The TAILOR Act also calls for a review of all regulations issued by financial regulatory agencies since the passage of the Dodd-Frank Act in 2010. Regulations falling short of the bill’s criteria for tailored regulations would have to be revised.
Rounds also introduced a bill that would amend the Consumer Financial Protection Act of 2010 to dismantle the CFPB by cutting off its funding from the Federal Reserve.
“A product of the ill-advised Dodd-Frank Reform Act, the CFPB is an unaccountable regulatory agency run by unelected bureaucrats with no oversight from Congress,” Rounds said. “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.”
Rounds’ bill would also require the CFPB to turn over all penalty funding and other funds that it has received from the Treasury Department.