WASHINGTON — Thirteen midsize banks sent a letter to the Senate Banking Committee on Monday supporting a regulatory relief bill that is likely to be voted on later this week.
“This bipartisan legislation is a common-sense approach that maintains regulatory authority but makes reasonable changes that allow traditional lenders to better meet the credit needs of the people and businesses in our rural and urban markets,” said the letter to Banking Committee Chairman Mike Crapo, R-Idaho, and Sen. Sherrod Brown, D-Ohio, the panel's ranking member.
“Our banks do not threaten U.S. financial market stability, and we should not be subjected to the same regulatory regime as larger banks with more complex and interconnected business models,” the banks added. Drafting the letter were Ally Financial, American Express, Bank of the West, BBVA Compass, BMO Financial Corp., Citizens Bank, Comerica Bank, Fifth Third Bancorp, Huntington Bancshares, KeyCorp, M&T Bank Corp., Regions Bank and SunTrust Banks Inc.
Crapo and four moderate Democrats on the panel negotiated the deal that resulted in the bill that passed out of the Banking Committee in December.
The bill would take a number of steps to provide regulatory relief to small and midsize banks. Numerous regional banks stand to benefit from a provision that narrows the scope of institutions defined as "systemically important" under the Dodd-Frank Act. Banks with assets of more than $250 billion would get that label, which qualifies them for tougher supervision. Under Dodd-Frank, that asset threshold is $50 billion, which captures more banks.
Even though the banks said that they support the bill, they noted they would prefer to scrap the asset threshold altogether and instead allow the Federal Reserve Board to designate banks as systemically important by using its own measurement of riskiness.
“While we believe that the best solution is to remove an arbitrary test and replace it with the Federal Reserve's business model review," their letter said, "we appreciate the significant change proposed in S. 2155 that better matches regulations to a firm's risk profile.”
