The Republican members of the House Financial Services Committee yesterday released a joint letter urging banking agencies to tailor regulation for regional and midsize banks based on actual risk rather than the “one-size-fits-all” approach.
In a letter led by committee Chairman French Hill (R-Ark.), the lawmakers urged regulations to revisit enhanced prudential standards, or EPS, for Category II, Category III and Category IV banks, which are generally between $100 billion to more than $700 billion in size.
“We believe the current framework of regulation for banks generally, and Category II, III and IV banks in the particular context of EPS regulation, acts as a barrier to more robust competition for the largest banks given the largely one-size-fits-all approach taken in regulating banks with $100 billion or more in assets and given the fact that Category II, III, and IV banks are forced to spread their regulatory compliance costs over smaller economies of scale,” they said.
The lawmakers also suggested indexing regulatory thresholds to economic growth metrics. “We note that your agencies previously indicated that they planned to reevaluate such thresholds ‘by periodically reviewing [them] and proposing changes through the notice and comment process,’ though no such action has occurred since the implementation of the current thresholds set in 2019,” they said.
