A letter to Federal Reserve Board Vice Chairman
Randal K. Quarles, sent by a group of U.S. senators, urges the Fed to "provide
immediate regulatory relief for regional banks that do not pose a systemic risk
to our financial system." Senate Banking Committee member David Perdue’s (R-Ga)
press release notes that the letter’s other signors include
Senators Bill Cassidy (R-La), Jim Inhofe (R-Okla), James Lankford (R-Okla),
Jerry Moran (R-Kan), Thom Tillis (R-NC), and Mike Rounds (R-SD).
The letter expresses concern with the Fed’s July statement that
banks with $100 billion to $250 billion in total assets may not receive
substantive relief from the enhanced prudential regulations in the recently
enacted Economic Growth, Regulatory Relief, and Consumer Protection Act. The Act
raised the asset threshold for enhanced prudential standards under the
Dodd-Frank Act from $50 billion to $100 billion in total assets immediately. For
banks with total assets between $100 billion and $250 billion, relief is
automatically granted 18 months after enactment. The law provides the Fed with
the authority to allow enhanced prudential standards to be re-imposed when there
is a risk to financial stability.
The senators are concerned by recent remarks by
Fed officials indicating that it will continue to apply Comprehensive Capital
Analysis and Review stress tests and other enhanced supervision regulations
designed for systemically important financial institutions on non-systemic
financial companies. The senators object to this course of action, stating that
Congress did not ask the Fed to create a third layer of treatment for banks
above and below $100 billion in total assets. Rather, it empowered the Fed to
tailor regulations to address individual risk profiles of banks so that all
non-systemic banks are treated in accordance with their risk profiles. The
senators indicated support for the Fed’s use of its systemic risk indicator
score data to identify appropriate tailoring. The senators also suggested that
the Fed give comparable regulatory treatment to intermediate holding companies
for international banks as the treatment given to U.S. banks of similar size and
risk.
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