BPI Supports House Financial Services Committee Markup of Targeted Regulatory Reform Bills

Dear Chairman Hill, Ranking Member Waters and Members of the Committee:

The Bank Policy Institute (BPI) writes in support of several measures being considered in this week's markup, including:

• HR 6553, the Tailoring and Indexing Enhanced Regulations (TIER) Act, sponsored by Rep. Andy Barr. HR 6553 would update the statutory tailoring thresholds set on a bipartisan basis in S. 2155 to reflect economic growth, with periodic adjustments thereafter, and also require the federal banking agencies to similarly review and update the non-statutory thresholds periodically. Adjusting these tailoring thresholds is important to allow banks to facilitate the broader economy as it grows, including the creation of new businesses and expansion of existing firms to meet this growing demand. Similarly, when tailoring thresholds remain fixed and not updated to reflect economic growth, a bank's total exposures might grow larger simply because the economy is growing, not because the bank's portfolio is becoming riskier or more complex, but the fixed thresholds would still subject them to stricter requirements nonetheless.
• HR 6544, the Regulatory Efficiency, Verification, Itemization, and Enhanced Workflow (REVIEW) Act, sponsored by Rep. William Timmons. HR 6544 would amend the periodic regulatory review process set by the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) to occur every seven years, rather than every 10 years currently. Additionally, the bill would require the prudential regulators to conduct an internal review of the cumulative impact of their regulations. Given the robust bank regulatory framework and constant updates enacted by multiple regulators, it makes sense to more frequently conduct these regulatory reviews to ensure that regulations are staying up to date and consistent with their original purpose.
• HR 6546, the Merger Process Review Act, sponsored by Rep. Roger Williams. HR 6546 would require the Inspectors General of the prudential regulators to conduct a review every three years of their merger review processes to ensure the M&A applications and approvals are being conducted consistent with the requirements of the law. Mergers and acquisitions enable banks to reach more customers, invest in technology and operate at scale, which provides further benefits to economic growth, efficiency and customer convenience. Unfortunately, the bank M&A process has been fraught with unpredictability and regulatory roadblocks, which has discouraged potential applicants from pursuing mergers that could benefit the economy and health of the banking system.
• HR 6550, the American Financial Institution Regulatory Sovereignty and Transparency (American FIRST) Act, sponsored by Rep. Barry Loudermilk. HR 6550 builds on important work that the Committee has conducted in providing oversight of how U.S. federal regulators coordinate and develop standards in conjunction with foreign regulators as part of international standard-setting bodies, which form the basis of subsequent regulations implemented domestically. Given the significance of many of these rulemakings that are born out of these international agreements, such as the Basel III Endgame standards, there is a clear need for more transparency into their development at this stage both under the Administrative Procedure Act (APA) and as part of regular Congressional oversight.
• HR 5913, the Community Investment and Prosperity Act, sponsored by Rep. Mike Lawler and Rep. Joyce Beatty. HR 5913, included as part of the Amendment in the Nature of a Substitute (ANS) to the Housing for the 21^st Century Act, would increase the discretionary Public Welfare Investments (PWI) cap from 15 to 20 percent. This modest increase to the cap, which has not been updated since 2006, would allow banks nearing the cap to increase their investments in projects that support low- and moderate-income communities, including affordable housing, so long as their regulator deems it prudent to preserve existing safeguards in the system.

BPI strongly supports these proposals and commends the Committee and the bill sponsors for their work advancing these commonsense reforms, which will further rationalize the bank regulatory framework and enable banks to support the broader economy.

Thank you for your consideration.

Sincerely,
Bank Policy Institute