The heads of the regulatory agencies are expected to endorse various proposals for regulatory relief tomorrow in a hearing in the Senate Banking Committee. The hearing will begin at 10 a.m.
In written testimony submitted in advance of the hearing, representatives from the Federal Reserve, FDIC and the Office of the Comptroller of the Currency expressed support for various actions to simplify the stress testing process, more closely tailor regulation and encourage the formation of new banks. Several measures addressed by the regulators echo recommendations from the recent Treasury report on regulatory reform that was released earlier this month.
Notably, Federal Reserve Governor Jerome Powell expressed his agency’s support for extending the timeline for living will submissions from annually to every two years. FDIC Chairman Martin Gruenberg agreed, calling the change “worthwhile” and adding that “there may be opportunities to greatly reduce the submission requirements for a large number of firms due to their relatively small, simple and domestically-focused banking activities.” Regulators also supported revisiting various asset-size thresholds, including the $10 billion threshold for company-run stress tests and the $50 billion threshold for enhanced prudential standards.
As part of efforts to remove outdated, unnecessary or overly burdensome regulation, Acting Comptroller of the Currency Keith Noreika proposed that Treasury conduct a periodic review of all Bank Secrecy Act Regulations, similar the EGRPRA process. This “would give financial institutions an opportunity to express their concerns directly to the agency with the authority issue, repeal and modify BSA rules,” Noreika said in his written statement.
In addition, Noreika proposed that Congress streamline the de novo application process by giving new banks the ability to obtain FDIC deposit insurance upon receiving a charter from the OCC. Currently, banks are required to submit an application to both the FDIC and the chartering authority (either the OCC or state regulatory agency, depending on charter type). Noreika recommended that Congress consider designating a time period that the FDIC could object to the granting of deposit insurance following the charter approval by OCC or state regulator.
Regulators also noted that they would be receptive to, among other things, an exemption for small banks from the Volcker Rule, additional enhancements to the capital planning and stress-testing process and additional exam relief, particularly for community banks.