The American Bankers Association this week submitted a list of recommendations for banking agencies as they conduct a congressionally mandated review of regulations, with the association focusing on reducing the regulatory burden for banks.
The Economic Growth and Regulatory Paperwork Reduction Act, or EGRPRA, requires the Federal Financial Institutions Examination Council and bank regulators to review their regulations every 10 years to identify any outdated or otherwise unnecessary regulatory requirements for their supervised institutions. As part of a two-year review, the agencies divided their regulations into 12 categories. For the third and most recent round, the agencies are soliciting comments on regulations in three categories: rules of procedure, safety and soundness, and securities.
In comments to the agencies, ABA said it is focusing on the broader goal of removing unnecessary regulatory burdens, “a priority shared by both regulators and the banking industry.” Among ABA’s many recommendations:
- The Liquidity Coverage Ratio and Net Stable Funding Ratio must reflect realistic outflows and recognize the diverse funding sources covered banks in times of stress.
- The Heightened Standards Guidelines should be recalibrated to appropriately distinguish between regional banks and large, systemically important financial institutions to ensure that regulatory expectations are proportionate to an institution’s risk profile and systemic footprint.
- Definitions related to the Financial Stability Oversight Council should be updated to reflect current market practices and risks.
- Agencies should adopt a more tailored approach to risk committee requirements for bank holding companies to better align regulatory expectations with an institution’s size, complexity, and risk profile.
“ABA looks forward to working with the agencies to find ways to reduce regulatory burden consistent with the shared goal of ensuring that bank operations are conducted in a safe and sound manner while enhancing the ability of banks to serve their customers,” the association said.
