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For Immediate Release
June 15, 2017
ABA Media Contact: Jeff Sigmund
(202) 663-5439
Follow us on Twitter: @ABABankers

ABA to Congress: Regulations Should be Tailored to a Banks’ Risk and Business Model


​WASHINGTON — Tailored regulation “encourages a diversity of business models while providing a regulatory program best adapted to the risks of each bank,” according to a statement for the record the American Bankers Association submitted ahead of today’s Senate Banking Committee hearing entitled, “Foster Economic Growth: Midsized, Regional and Large Institution Perspective.”  ABA’s statement also emphasized that regulatory asset thresholds of any type are “arbitrary and a poor substitute for effective regulatory policy.”
“Since the enactment of the Dodd-Frank Act and its statutory size thresholds, banking regulators have relied heavily on the single criterion of asset size of financial institutions as a proxy for systemic risk, creating regulatory ‘cliffs’ whereby all institutions over a certain size are regulated and supervised the same,” ABA said.  “Although size-only regulation may be a simpler method for supervising financial institutions, it is inappropriate and needlessly burdensome for many financial institutions with noncomplex operations and business models, thereby increasing costs and reducing products and services available to bank customers. In short, economic growth in our communities suffers.”
ABA stressed that what is needed are better overall principles for bank regulation.
“The best solution is to tailor regulations according to the risks and business model of the bank,” ABA said.  “This is the most effective model for bank regulation because it encourages diversity of business models while providing a regulatory program best adapted to the risks of each bank.  Pending legislative action, the regulators should use their discretion under current law to tailor regulations appropriately.”      
Today’s hearing comes one week after ABA Chairman Dorothy A. Savarese called for targeted, sensible changes to financial regulation when she testified before the Committee.
For a copy of ABA’s full statement for the record, please click here.
The American Bankers Association is the voice of the nation’s $17 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $13 trillion in deposits and extend more than $9 trillion in loans.