Speaking today at ABA’s Government Relations Summit, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) offered a preview of a financial regulatory reform plan that he expects to unveil soon. Key measures in the bill include accountability for both financial institutions and regulatory agencies, relief from Basel III capital requirements for community banks and changes to Federal Reserve mechanisms, he said.
“The bold and better alternative you will see from committee Republicans will provide vast regulatory relief for financial institutions in exchange for meeting high, but simple, capital requirements,” he said. “If financial institutions elect to hold strong Tier 1 capital, then they should gain relief from both Dodd-Frank and Basel’s burdensome regulations, neither of which were meant for community banks and shouldn’t apply to them to begin with.”
In addition, all financial regulations will be subjected to a cost-benefit analysis, Hensarling said. He emphasized that regulators that overstep their authority would be held to account. For example, asked about the National Credit Union Administration’s expansive field of membership and member business lending rulemakings, Hensarling said: “I don’t see the authority for [NCUA] to do this.”
“The will of the people’s elected representatives are circumvented in acts like you see that the NCUA did,” he added. “It’s right on our radar screen and it’s one we’re working on now.”
Hensarling emphasized that his plan is not about “a debate between regulation and de-regulation.” Instead, he said, “this is going to be a debate over the future of our economy and the hopes and dreams of millions. We believe well-functioning, transparent and efficient capital markets provide a ladder of opportunity, and when all Americans have more opportunities, the economy rises with them.”