Bank regulators were urged to move apace on efforts to tailor prudential standards for banks under $250 billion in assets during a Senate Banking Committee hearing Tuesday on implementation of the recently enacted financial reform law.
Committee Chairman Mike Crapo (R-Utah) noted in particular that the reason Congress provided banking regulators time to implement the law’s stress-test changes was so they could develop a streamlined regime. “I encourage you to move quickly here,” he said.
Crapo also called for relief under the Volcker Rule for all institutions (not just those statutorily exempted from the rule), as was urged in a letter signed by him and six other panel Republicans Monday.
The stress test and Volcker Rule are among the key regulatory areas addressed in the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155), enacted this May.
Tuesday’s hearing was the first held with all the federal financial institution prudential regulators providing testimony on S. 2155 implementation: Comptroller of the Currency Joseph Otting (of the Office of the Comptroller of the Currency, or OCC), Federal Deposit Insurance Corp. (FDIC) Chairman Jelena McWilliams, Federal Reserve Vice Chairman for Supervision Randal Quarles, and National Credit Union Administration (NCUA) Chairman J. Mark McWatters.
S. 2155 revised the requirement for supervisory stress tests from “annual” to “periodic” testing; excludes institutions under $100 billion from the requirement; and, for institutions between $100 billion and $250 billion, requires regulators to apply it only after making risk determinations.
Quarles, answering Crapo’s question about the timing of these changes, said generally that the required regulatory tailoring for banks with assets between $100 billion and $250 billion “is our highest priority.” A proposed rulemaking is expected to be out soon, he said.
Crapo had also asked McWilliams about regulators’ progress developing a simpler leverage ratio for community banks; she said they hope to have a proposed rule out “shortly before year end, if not much sooner.”
McWilliams said she anticipated this would exclude from the Basel III regine small community banks, meaning those with less than $10 billion in assets, and would be “commensurate with the risk profile” of small community banks.