H.R. 3230: Financial Institution Regulatory Tailoring Enhancement Act

This bill, titled the Financial Institution Regulatory Tailoring Enhancement Act, aims to amend existing regulations concerning financial institutions based on their asset sizes. Specifically, the bill proposes to increase the asset thresholds that determine the regulatory requirements for various financial institutions, effectively raising the limit from $10 billion to $50 billion.

Increased Asset Thresholds

The key provisions of the bill include:

• Bureau Supervision: Changes to the Consumer Financial Protection Act (CFPA) would increase the asset threshold for certain supervisory requirements from $10 billion to $50 billion. This means that fewer financial institutions would be subjected to oversight from the Consumer Financial Protection Bureau (CFPB) if they have assets under this new threshold.
• Volcker Rule Requirements: The Volcker Rule, which restricts certain investment activities by banks, would see its asset threshold raised to $50 billion as well. This alteration means smaller banks would be exempt from these rules unless they exceed this new asset limit.
• Qualified Mortgage Requirements: The thresholds for qualified mortgages would similarly be adjusted to $50 billion. This could change the types of loans that packaged mortgages would need to meet to be considered safe and secure, potentially impacting smaller lenders.
• Leverage and Risk-Based Capital Requirements: The bill would also alter the asset limit for leverage and risk-based capital requirements from $10 billion to $50 billion, reducing the regulatory burden on smaller institutions regarding their capital requirements.

Rationale for the Bill

The rationale behind increasing these thresholds is to lessen regulatory constraints on smaller financial institutions, which supporters argue can facilitate lending and improve the financial marketplace's competitiveness. The legislative intent is to create a more favorable environment for institutions with assets below the new threshold, allowing them to operate with reduced regulatory oversight.

Potential Impact

By raising the asset limits, the bill could impact the stability and oversight of financial institutions. Proponents argue that it can benefit smaller banks and credit unions, enabling them to better serve consumers without facing the heavy compliance costs associated with larger financial institutions. Critics, however, may express concerns that these changes could lead to insufficient oversight and pose risks to consumers and the financial system.

Relevant Companies

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