CBA: McCaskill-Perdue Risk Legislation Good for Consumers, Necessary for Regulators

September 29, 2017
Nick Simpson

Washington, D.C. – The Consumer Bankers Association today wrote Senators Claire McCaskill (D-Mo.) and David Perdue (R-Ga.) to offer support for the Systemic Risk Designation Improvement Act, bipartisan legislation designed to give the Federal Reserve flexibility when making systemic risk designations.

 

“Designating risk based on how big a financial institution is does not make sense and it hurts consumers,” CBA President and CEO Richard Hunt said when sending the letter. “This legislation allows regulators to take a big-picture view of risk by looking at the activities a financial institution undertakes instead of a simple assets threshold. Examining multiple risk factors is more telling and can reduce unnecessary compliance burdens that limit credit availability to consumers.”  

 

Similar legislation sponsored by Congressman Blaine Luetkemeyer (R-Mo.) passed the U.S. House of Representatives last year.

 

The full letter is below:

 

September 29, 2017

 

The Honorable Claire McCaskill                                             The Honorable David Perdue

U.S. Senate                                                                                  U.S. Senate

503 Hart Senate Office Building                                            383 Russell Senate Office Building

Washington, D.C.  20002                                                        Washington, D.C.  20002

 

Dear Senators McCaskill and Perdue:

 

On behalf of the Consumer Bankers Association (CBA), I write in support of S. 1893, the

Systemic Risk Designation Improvement Act.  CBA is the voice of the retail banking industry whose products and services provide access to credit for consumers and small businesses.  Our members operate in all 50 states, serve more than 150 million Americans, and collectively hold two-thirds of the country’s total depository assets.

 

Currently, the Dodd-Frank Act designates a financial institution as systemically important if it meets or exceeds an arbitrary $50 billion asset threshold.  This asset threshold is a flawed approach used by the Financial Stability Oversight Council (FSOC) to assess the risk an institution poses to the American financial system.  S. 1893 would more appropriately gauge the systemic risk of an institution by measuring the complexity, scale, and activities of the institution.  

 

Requiring the evaluation of multiple risk factors, as opposed to the use of a simple asset size calculation, will provide regulators a more accurate systemic risk profile of an institution and can reduce unnecessary and burdensome compliance measures that increase operating costs and limit credit availability to consumers.  CBA strongly supports S. 1893 and encourages the Senate to pass this important legislation.

 

Sincerely,

 

Richard Hunt

President and CEO

Consumer Bankers Association

 

 

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About the Consumer Bankers Association

The Consumer Bankers Association represents America’s retail banks above $10 billion in assets. We advance legislation and promote policies geared toward creating a stronger industry and economy. Established in 1919, CBA’s corporate member institutions account for 1.6 million jobs in America, extend roughly $3 trillion in consumer loans, and provide $270 billion in small business loans. Follow us on Twitter @consumerbankers.