A proposed Senate bill to raise the asset-based regulatory thresholds for banks is commonsense legislation that would keep regulation aligned with economic growth, the American Bankers Association said in a letter to senators.
The Tailoring and Indexing Enhanced Regulations, or TIER, Act, (S. 5452) introduced by Sen. Katie Britt (R-Ala.) would make a one-time adjustment to certain key statutory thresholds to reflect historical economic growth. It would also require the Federal Reserve to evaluate whether nominal gross domestic product or the consumer price index is the more appropriate measure for the thresholds and periodically adjust them to reflect future economic growth.
A modified version of the bill was passed in the House earlier this year as part of the Main Street Capital Access Act.
ABA said the TIER Act would modernize outdated asset-based thresholds in federal banking law for midsize and regional banks. “Requirements once tied to meaningful differences in size, complexity, or risk now discourage organic growth, dilute regulatory resources, and reduce capital available for community investment,” the association said.
“This important modernization effort would increase transparency, reduce arbitrary burdens and help regulators focus on actual risk while maintaining appropriate safety and soundness standards,” ABA said.
