Press Releases

Today, the Subcommittee on Financial Institutions, led by Chairman Andy Barr (KY-06), held a hearing entitled, "Regulatory Overreach: The Price Tag on American Prosperity." This hearing focused on promoting regulatory fairness, transparency, and appropriately scaled oversight within the financial system. Members explored reforms to increase accountability in bank supervision and enhance interagency coordination, with the goal of establishing a more efficient and tailored regulatory framework while preserving financial stability and public trust.

Watch the hearing online HERE.  

On the benefits of regulatory tailoring:

• "For fifteen years, we heard testimony in this room about how Dodd-Frank has hollowed out our banking sector – especially hurting small and mid-sized institutions that serve as the backbone of our local economies. ...This hearing is an opportunity to build the record of support for ideas like regulatory tailoring and supervisory modernization – issues that every community banker and credit union back in our districts are thinking about," said Chairman French Hill (AR-02).

• “I’ve heard from community bankers across the country about the inconsistency and lack of clarity in the supervision and examination framework being driven by partisan bureaucrats in Washington. Rather than our Prudential regulators working alongside supervised institutions to ensure compliance, we have seen a shift to promoting agendas such as climate-related finance or the debanking of legally operating businesses – dangerous deviations from the core mission and purpose of these agencies. … This hearing examined how Congress can direct bank examiners to use objective, risk-based metrics in their examination process, specifically regarding the CAMELS framework and the abuse of the 'management' component that has hindered otherwise-compliant firms,” said Subcommittee Chair Barr.

On the harm of a one-size-fits-all regulatory approach:

• "When I speak with community leaders back home in my home state of Texas, once concern has remained constant over the past four years - the crushing weight of regulatory burdens and one-size-fits-all rules. Under the Biden Administration, the regulatory agenda prioritized partisan policies over sound, common-sense financial regulations, with little consideration for the needs of the smallest institutions," said Rep. Roger Williams (TX-25).

Witnesses echoed their support for the work of the Committee.

Sarah Christine Flowers, Senior Vice President, Senior Associate General Counsel, Bank Policy Institute stated,  "The U.S. has a uniquely versatile and varied banking sector, which fuels its diversified economy. U.S. economic vitality requires local relationship banking, sophisticated consumer services, strong commercial lending and vibrant capital markets. Banks of all sizes play a vital role in fueling U.S. economic growth. ...Excessive regulation is hindering the ability of the banking system to serve its customers efficiently. For mid-sized and regional banks, the problem starts with the federal banking agencies effectively ignoring a statutory mandate, enacted on a bipartisan basis by Congress in 2018, that enhanced prudential standards for banks be appropriately tailored. There is an urgent need to index the thresholds established by the agencies’ tailoring regulations for all banks for economic growth and inflation."

J. Michael Radcliffe, Chairman & Chief Executive Officer, Community Financial Services Bank, stated, "Community banks play a unique and irreplaceable role in our financial system. ...In many rural areas, community banks are the only financial institutions serving local residents. ...Without community banks, rural communities face diminished access to capital, which stifles growth and innovation. Nationwide, community banks are responsible for nearly 60% of all small business loans and over 80% of bank agricultural lending. Despite their vital role, community banks hold just 13% of total banking assets, underscoring the efficiency and impact of their operations. However, their survival is increasingly jeopardized by the disproportionate effects of regulatory compliance. Since the 2008 financial crisis, regulatory reforms have significantly increased compliance requirements across the banking sector. While these reforms were well-intentioned, aiming to prevent systemic risks, many of them are fundamentally ill-conceived and have placed an outsized burden on smaller institutions."

Margaret E. Tahyar, Partner, Head of Financial Institutions Group, Davis Polk & Wardwell LLP, stated, "More work needs to be done to make supervision more effective, fair, and consistent across banks. The agencies have made efforts in this direction through increased use of horizontal exams, which review a specific business or function at multiple institutions, and – in theory, at least – provide feedback on identified best practices among the examined banks. These horizontal reviews can be helpful, but suffer from the same concerns that apply to traditional exams, such as lack of transparency, and as a function of their design can push banks towards a mono-model view of best in class without taking into account the significant differences among banks. ...Tailoring as a concept in supervision is one way to be more efficient, effective, and fair within a framework of consistency within each business model."