WASHINGTON–The credit union-supported TAILOR Act has passed the House.
The TAILOR Act, for “Taking Account of Institutions with Low Operation Risk Act of 2017,” requires federal financial institution regulators to take into consideration the institution’s risk profiles and business models of institutions when taking regulatory actions. The bill was passed by the House Wednesday.
In addition, the bill also requires regulators to “look back” at the regulations adopted in the seven years prior to the bill’s introduction in the House and ending on the day the bill is enacted into law, to apply the requirements of the bill onto those regulations.
The legislation was sponsored by Rep. Scott Tipton (R-CO) and was part of a package with other legislation related to financial institution regulation.
In considering risk profiles of regulated institutions, the TAILOR Act would require regulators to:
- Consider the risk profile and business models of institutions being regulated
- Determine the necessity, appropriateness, and impact of applying such regulatory action on the institutions
- To “tailor such regulatory action in a manner that limits the regulatory compliance impact, cost, liability risk, and other burdens, as appropriate, for the risk profile and business model” of the institutions.
Other considerations regulators must consider under the TAILOR Act include:
- The impact that such regulatory action, by itself and in the aggregate effect of other regulations, has on the ability of regulated institutions to serve evolving and diverse customer needs
- The potential impact of examination manuals, regulatory actions taken with respect to third-party service providers, or other regulatory directives “that may be in conflict or inconsistent with the tailoring of such regulatory action” to limit compliance impact, cost, liability risk or other burdens.
- The underlying policy objectives of the regulatory action and statutory scheme involved
The legislation requires the Federal Financial Institutions Examination Council (FFIEC) would be required to submit a report on the actions taken by its member regulators, and also testify before the panels.