Britt Introduces TIER Act To Raise, Index Bank Regulatory Thresholds
By CU Today Staff —
WASHINGTON—Sen. Katie Britt (R-AL) has introduced legislation that would make a one-time upward adjustment to certain asset-based regulatory thresholds for banks and then periodically index them to economic growth.
The Tailoring and Indexing Enhanced Regulations (TIER) Act is intended to prevent institutions from moving into more stringent regulatory categories simply because the economy and their assets have grown, according to Britt's office. The bill was introduced Sept. 22 and referred to the Senate Banking Committee.
The legislation would direct the Federal Reserve to determine whether nominal gross domestic product or the Consumer Price Index is the appropriate measure for each covered threshold and periodically adjust the thresholds going forward. Britt's office said the legislation differs from the House-passed approach by also restoring a one-time adjustment designed to account for economic growth that has already occurred.
“Bank regulation should be based on an institution’s actual size, complexity, and risk, not on arbitrary thresholds that become increasingly outdated with every passing year,” Britt said. “When our economy grows but these thresholds remain frozen in place, banks can be pushed into regulatory categories that Congress never intended for them to be simply because of economic growth. The TIER Act provides a commonsense solution that preserves strong safety and soundness standards while ensuring our regulatory framework remains appropriately tailored and grounded in economic reality. Ultimately, that means greater certainty for financial institutions and more opportunity for them to invest in families, small businesses, and communities across Alabama and our nation.”
Originally reported by CU Today.