2 bills before House this week on financial institutions regulation, exams

The House is scheduled to take up two bills this week to require “tailoring” of regulations for banks, savings associations and credit unions and create an independent examination review structure.

Wednesday, the House is scheduled to take up the Taking Account of Institutions With Low Operation Risk Act (TAILOR Act, H.R. 1116) under a suspension of the rules. Introduced in February 2017 by Rep. Scott Tipton (R-Colo.), the TAILOR Act would require the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (The Fed), Federal Deposit Insurance Corp. (FDIC), National Credit Union Administration (NCUA) and Consumer Financial Protection Bureau (CFPB) to “tailor” their regulations to limit the compliance impact, cost, liability risk and other burdens on depository institutions based on their risk profiles and business models. Impacts of other agencies’ rules and impacts of regulatory action “with respect to” third-party service providers would also be considered.

As to oversight, the TAILOR Act calls for yearly reports and testimony to Congress by each regulator on its activities under the measure. The Federal Financial Institutions Examination Council (FFIEC) would also be required to report to Congress on the extent to which any rule changes produced different treatments of “similarly situated institutions of diverse charter types.”

There’s a seven-year look-back requirement in the bill as well: It requires a review of rules adopted from early 2010 up to the date of enactment of the TAILOR Act, thus covering all rules adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Regulators would have three years from the bill’s enactment to make any required rule changes.

The TAILOR Act has 85 cosponsors (80 Republicans, five Democrats).

As early as Thursday, the House is expected to consider the Financial Institutions Examination Fairness and Reform Act (H.R. 4545). Also introduced by Tipton, this measure would revise the Federal Financial Institutions Examination Council (FFIEC) Act of 1978 to set timing requirements for exam reports and create within the FFIEC an “Office of Independent Examination Review.” Examined institutions would be authorized to ask this office for reviews of material exam findings.

This new FFIEC office would have its own director, who would serve for five years, could be appointed for another five years, would be authorized to hire staff, and would provide yearly reports to Congress. The bill would require that any reviews done by this office not rely on agency recommendations but be performed anew. The measure sets up a formal review process that also addresses institutions’ ability to appeal final review findings.

The examinations measure has five Republican and two Democratic cosponsors.

H.R. 1116 — TAILOR Act of 2017

H.R. 4545 — Financial Institutions Examination Fairness and Reform Act

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