The House today passed by a bipartisan vote of 254 to 161 the Systemic Risk Designation Improvement Act, a bill strongly advocated by ABA and the state bankers associations. Introduced by Rep. Blaine Luetkemeyer (R-Mo.), the bill eliminates the automatic designation of banks as systemically important based solely on asset size and directs regulators to develop a formal process for making SIFI designations that considers variations in banks’ asset size, business model and risk profile. Twenty Democrats voted in favor of the bill.
ABA President and CEO Rob Nichols applauded the passage of the bill, which is a key part of ABA’s Agenda for America’s Hometown Banks. “This bill recognizes that size-only regulation is needlessly burdensome, increases costs and reduces products and services available to bank customers,” Nichols said. “The most effective and value-added supervision system is one that is risk-based and individually tailored, taking into account a wide variety of factors relevant to a bank’s size, business model, complexity and other areas.”