The American Bankers Association today welcomed the recent introduction of the Systemic Risk Designation Improvement Act by Rep. Blaine Luetkemeyer (R-Mo.). The bill — a key part of ABA’s Blueprint for Growth — replaces the arbitrary $50 billion asset threshold for systemically important status in the Dodd-Frank Act with a more tailored, nuanced set of systemic risk indicators. Under the bill, the Fed would review a financial institution’s size, interconnectedness, global activity and complexity to determine whether it should be subject to regulation as a systemically important financial institution.
“Since the enactment of [Dodd-Frank] and its statutory size thresholds, banking regulators have relied heavily on the asset size of financial institutions, creating regulatory ‘cliffs’ whereby all institutions over a certain size are subject to very similar regulatory and supervisory standards,” said ABA. “ABA believes strongly that the most effective and value-added supervision regime is one that is risk-based and individually tailored.”
The bill has attracted wide bipartisan support, with 11 co-sponsors: Reps. Kyrsten Sinema (D-Ariz.), Roger Williams (R-Texas), David Scott (D-Ga.), French Hill (R-Ark.), Josh Gottheimer (D-N.J.), Ted Budd (R-N.C.), Steve Stivers (R-Ohio), Gregory Meeks (D-N.Y.), Joyce Beatty (D-Ohio), Pete Sessions (R-Texas) and Mia Love (R-Utah). The House passed a similar bill in the previous Congress by a wide bipartisan margin.