What This Bill Does
This bill requires five federal agencies that regulate banks and financial institutions to consider how different types of institutions operate and what level of risk they pose before creating new rules. The bill also requires these agencies to adjust their rules so the impact on banks matches the risk involved, and to create shorter reporting forms for smaller banks.
Who It Affects
Federal financial institutions regulatory agencies (the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Bureau of Consumer Financial Protection). Banks eligible for the Community Bank Leverage Ratio (a measure of how much money a bank has compared to what it lends out). Congress through required reports.
Key Provisions
- Regulatory agencies must consider the risk profile (how much financial danger a bank faces) and business models of each type of institution before creating new rules, and must tailor rules to limit costs, staffing needs and other burdens based on risk level (Sec. 2(b)).
- Agencies must explain in writing how they applied these requirements in every proposed and final rule (Sec. 2(d)).
- Each agency must report to Congress annually about specific actions taken to tailor their rules (Sec. 2(e)(1)).
- Agencies must review regulations created in the 7 years before this bill was introduced and apply these new requirements to them within 3 years (Sec. 2(f)).
- Banking agencies must create shorter reporting forms for the first and third reports each year that all banks eligible for the Community Bank Leverage Ratio must submit (Sec. 3).
- Banking agencies must report to Congress within 18 months about how to modernize the way they supervise (oversee) banks (Sec. 4).
What Changes
When this law takes effect, federal banking regulators cannot create one-size-fits-all rules. They must adjust their rules based on how risky a bank is and how it operates. Banks will submit shorter paperwork forms twice a year instead of full reports. Federal agencies must publicly explain how they considered bank risk when writing rules. Banking agencies must study how to update their supervision methods and report findings to Congress.
Important Definitions
Federal financial institutions regulatory agency: The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Bureau of Consumer Financial Protection.
Regulatory action: Any proposed, interim or final rule or regulation, but not actions that apply to just one individual bank like enforcement actions or orders.
Community Bank Leverage Ratio: Not specified in bill text.
II
118TH CONGRESS
1ST SESSION
S. 362
To require the Federal financial institutions regulatory agencies to take risk
profiles and business models of institutions into account when taking
regulatory actions, and for other purposes.
IN THE SENATE OF THE UNITED STATES
FEBRUARY 9, 2023
Mr. ROUNDS (for himself, Ms. LUMMIS, Mr. TILLIS, Mr. HAGERTY, and Mr.
DAINES) introduced the following bill; which was read twice and referred
to the Committee on Banking, Housing, and Urban Affairs
A BILL
To require the Federal financial institutions regulatory agen-
cies to take risk profiles and business models of institu-
tions into account when taking regulatory actions, and
for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Taking Account of In-
4
stitutions with Low Operation Risk Act of 2023’’ or the
5
‘‘TAILOR Act of 2023’’.
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•S 362 IS
SEC. 2. TAILORING REGULATION TO BUSINESS MODEL AND
1
RISK.
2
(a) DEFINITIONS.—In this section—
3
(1) the term ‘‘Federal financial institutions reg-
4
ulatory agency’’ means the Office of the Comptroller
5
of the Currency, the Board of Governors of the Fed-
6
eral Reserve System, the Federal Deposit Insurance
7
Corporation, the National Credit Union Administra-
8
tion, and the Bureau of Consumer Financial Protec-
9
tion; and
10
(2) the term ‘‘regulatory action’’—
11
(A) means any proposed, interim, or final
12
rule or regulation; and
13
(B) does not include any action taken by
14
a Federal financial institutions regulatory agen-
15
cy that is solely applicable to an individual in-
16
stitution, including an enforcement action or
17
order.
18
(b) CONSIDERATION AND TAILORING.—For any reg-
19
ulatory action occurring after the date of enactment of
20
this Act, each Federal financial institutions regulatory
21
agency shall—
22
(1) take into consideration the risk profile and
23
business models of each type of institution or class
24
of institutions subject to the regulatory action; and
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•S 362 IS
(2) tailor the regulatory action applicable to an
1
institution, or type of institution, in a manner that
2
limits the regulatory impact, including cost, human
3
resource allocation, and other burdens, on the insti-
4
tution or type of institution as is appropriate for the
5
risk profile and business model involved.
6
(c) FACTORS TO CONSIDER.—In carrying out the re-
7
quirements of subsection (b), each Federal financial insti-
8
tutions regulatory agency shall consider—
9
(1) the aggregate impact of all applicable regu-
10
latory action on the ability of institutions to flexibly
11
serve their customers and local markets on and after
12
the date of enactment of this Act;
13
(2) the potential impact that efforts to imple-
14
ment the regulatory action and third-party service
15
provider actions may work to undercut efforts to tai-
16
lor the regulatory action described in subsection
17
(b)(2); and
18
(3) the statutory provision authorizing the reg-
19
ulatory action, the congressional intent with respect
20
to the statutory provision, and the underlying policy
21
objectives of the regulatory action.
22
(d) NOTICE
OF
PROPOSED
AND
FINAL
RULE-
23
MAKING.—Each Federal financial institutions regulatory
24
agency shall disclose and document in every notice of pro-
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•S 362 IS
posed rulemaking and in any final rulemaking for a regu-
1
latory action how the agency has applied subsections (b)
2
and (c).
3
(e) REPORTS TO CONGRESS.—
4
(1) INDIVIDUAL AGENCY REPORTS.—Not later
5
than 1 year after the date of enactment of this Act
6
and annually thereafter, each Federal financial insti-
7
tutions regulatory agency shall submit to the Com-
8
mittee on Banking, Housing, and Urban Affairs of
9
the Senate and the Committee on Financial Services
10
of the House of Representatives a report on the spe-
11
cific actions taken to tailor the regulatory actions of
12
the Federal financial institutions regulatory agency
13
pursuant to the requirements of this section.
14
(f) LIMITED LOOK-BACK APPLICATION.—
15
(1) IN GENERAL.—Each Federal financial insti-
16
tutions regulatory agency shall—
17
(A) conduct a review of all regulations
18
issued in final form pursuant to statutes en-
19
acted during the period beginning on the date
20
that is 7 years before the date on which this
21
Act is introduced in the Senate and ending on
22
the date of enactment of this Act; and
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(B) apply the requirements of this section
1
to the regulations described in subparagraph
2
(A).
3
(2) REVISION.—Any regulation revised under
4
paragraph (1) shall be revised not later than 3 years
5
after the date of enactment of this Act.
6
SEC. 3. SHORT-FORM CALL REPORTS FOR ALL BANKS ELI-
7
GIBLE FOR THE COMMUNITY BANK LEVER-
8
AGE RATIO.
9
The appropriate Federal banking agencies, as defined
10
in section 3 of the Federal Deposit Insurance Act (12
11
U.S.C. 1813), shall promulgate regulations establishing a
12
reduced reporting requirement for all banks eligible for the
13
Community Bank Leverage Ratio, as defined in section
14
201(a) of the Economic Growth, Regulatory Relief, and
15
Consumer Protection Act (12 U.S.C. 5371 note), when
16
making the first and third report of condition of a year
17
as required by section 7(a) of the Federal Deposit Insur-
18
ance Act (12 U.S.C. 1817(a)).
19
SEC. 4. REPORT TO CONGRESS ON MODERNIZATION OF SU-
20
PERVISION.
21
Not later than 18 months after the date of enactment
22
of this Act, the appropriate Federal banking agencies, as
23
defined in section 3 of the Federal Deposit Insurance Act
24
(12 U.S.C. 1813), in consultation with State bank super-
25
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•S 362 IS
visors, shall submit to the Committee on Banking, Hous-
1
ing, and Urban Affairs of the Senate and the Committee
2
on Financial Services of the House of Representatives a
3
report on the modernization of bank supervision, including
4
the following factors:
5
(1) Changing bank business models.
6
(2) Examiner workforce and training.
7
(3) The structure of supervisory activities with-
8
in banking agencies.
9
(4) Improving bank-supervisor communication
10
and collaboration.
11
(5) The use of supervisory technology.
12
(6) Supervisory factors uniquely applicable to
13
community banks.
14
(7) Changes in statutes necessary to achieve
15
more effective supervision.
16
Æ
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