Banking agencies are required by Congress to review their regulations every 10 years but their past reviews have been “underwhelming,” resulting in no reduction in regulatory burden, Federal Reserve Vice Chair for Supervision Michelle Bowman said today.
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Financial Institutions Examination Council and bank regulators to review their regulations every decade to identify any outdated or otherwise unnecessary regulatory requirements for their supervised institutions.
In remarks at a Kansas City Fed conference, Bowman criticized the past two EGRPRA reviews for failing to reduce regulatory burden, calling it “an unacceptable outcome.” The agencies are currently engaged in a new round of EGRPRA review.
“We must take this process seriously, and through it, actually identify opportunities for change that will have lasting impact,” Bowman said. “We are implementing the current process to provide meaningful engagement for stakeholders to identify regulatory changes that result in less complexity, lower compliance costs and increased efficiency while also maintaining safety and soundness.”
Bowman said many of the Fed’s regulations have not been reviewed or updated in 20 years. “Given the dynamic nature of the banking system and how the economy and banking industry have evolved over that period, we should update and simplify many of the [Fed] board’s regulations, including thresholds for applicability and benchmarks. These thresholds should also be indexed to account for economic growth and inflation,” she said.
As part of the EGRPRA process, the American Bankers Association recently submitted a list of recommendations to reduce the regulatory burden on banks, including asking that the Fed rescind its rule implementing Regulation II, which sets standards for debit card interchange fees.
