Tipton Introduces Bill to Tailor Regulations, Ease Burden on Small Banks and Credit Unions

WASHINGTON—Today, Congressman Scott Tipton (R-CO) introduced the Taking Account of Institutions with Low Operation Risk (TAILOR) Act of 2015 (H.R. 2896) to provide smaller community banks and credit unions relief from onerous regulatory compliance burdens. By requiring federal regulatory agencies to tailor regulations to fit the business model and risk profile of institutions, instead of imposing less effective and more burdensome one-size-fits-all regulations, the legislation would allow community banks and credit unions to focus more of their resources on providing services to customers and growing their businesses, instead of draining them on excessive compliance. The bill will also free up resources for federal regulators to better focus oversight efforts on higher risk institutions.

“Banks and credit unions are currently regulated under a one-size-fits-all approach regardless of size or risk profile. As a result, regulations designed and intended for big banks are also applied to small community and independent banks or credit unions. The compliance regimens and costs imposed by these one-size-fits-all regulations are unbearable for small community banks that face an unnecessarily heavy compliance burden with fewer available employees and resources than much larger institutions,” said Tipton. “Regulations should be tailored to meet the risk profile and business model of specific institutions to prevent unnecessary costs and burdens to those institutions, while ensuring that government regulators are able to better focus their resources to provide oversight and ensure a safe and reliable financial marketplace. The TAILOR Act would foster a regulatory environment where small banks and credit unions can focus their time and assets on investing in their surrounding communities, helping to generate economic growth and create opportunities, rather than sinking their resources into overly burdensome regulatory compliance that was never intended to impact smaller bank and credit union institutions in the first place.”

The Taking Account of Institutions with Low Operation Risk (TAILOR) Act of 2015:

  • Requires the federal financial institutions regulatory agencies (Federal Reserve, FDIC, OCC, NCUA, and CFPB) to tailor any regulatory action occurring after enactment to appropriately apply to banks and credit unions.
  • Requires the federal financial institutions regulatory agencies to consider the risk profile and business model of the institutions and determine the necessity, appropriateness, and impact of applying such regulatory action to those institutions. Not only will this ensure appropriately tailored compliance obligations for banks and credit unions of various risk profiles, but the legislation will also save valuable time and resources for bank examiners.
  • Requires the five regulatory agencies would to individually report in person and testify to the House Committee on Financial Services and the Senate Banking Committee annually on the specific actions taken to tailor the agency’s regulatory actions as required by the bill.
  • Requires that within three years of the enactment, the five federal regulatory agencies review all regulations adopted over the five years prior to enactment and apply the requirements of this bill to such regulations.

See a pdf of the TAILOR Act HERE.