Yellen: Banks Need ‘Tailored’ Regulation

In her opening remarks for the St. Louis Fed’s third annual Community Banking Research and Policy Conference, Federal Reserve Chairman Janet Yellen emphasized the importance of tailored regulation of banks with different asset bases and business models.

“When it comes to bank regulation and supervision, one size does not fit all,” she said. “To effectively promote safety and soundness and ensure consumer compliance without creating undue regulatory burden, rules and supervisory approaches should be tailored to different types of institutions.”

Yellen’s comments echo those of other top regulators in calling for tailored supervision and pointing out areas in which Congress could make it easier for supervisors to tailor rules. As part of its Agenda for America’s Hometown Banks, ABA has strongly advocated for tailored regulation. ABA and the state associations have together advocated for the TAILOR Act introduced in the House, which would direct financial regulators to tailor regulatory actions based on the sizes, business models, risk profiles and other differentiating characteristics of the institutions they supervise.