ABA President and CEO Rob Nichols today wrote to House leadership urging them to pass the Systemic Risk Designation Improvement Act (H.R. 6392), which is up for a vote this Thursday. Introduced by Rep. Blaine Luetkemeyer (R-Mo.), the bill would eliminate the automatic designation of banks as systemically important based solely on asset size and instead require regulators to develop a formal process for making SIFI determinations based on the financial institution’s specific risk profile. The bill was previously passed by a strong bipartisan vote in the House Financial Services Committee.
“Although size-only regulation may be a simple short cut method for supervising financial institutions, it is inappropriate and needlessly burdensome for many financial institutions with noncomplex operations and business models, thereby increasing costs and reducing products and services available to bank customers,” Nichols wrote. “ ABA strongly believes that the most effective and value-added supervision regime is one that is risk-based and individually tailored, taking into account a wide variety of factors.”