Tapping into his experience as a former state bank examiner and local community banker, U.S. Rep. Blaine Luetkemeyer (MO-3) introduced bipartisan legislation that would provide commonsense regulatory changes to help traditional regional banks serve more consumers and small businesses.

“We should not be in the business of basing regulatory regimes solely on arbitrary asset size numbers,” Luetkemeyer said. “This tailored approach will free commercial banks to make loans to customers, supporting economic growth, while allowing federal regulators to use the better methods to determine risk”

Luetkemeyer’s Systemic Risk Designation Improvement Act of 2014 allows regulators to recognize the differences between regional banks, most of which have traditional business models similar to community banks, and larger, more complex institutions. Regional banks are focused on local deposit-taking and lending, engage in little or no non-bank operations such as trading, and make almost no loans outside the United States. This domestic banking focus distinguishes them from more complex firms that engage in non-bank activities, fund themselves outside of traditional deposits and have active international operations.

The bill would tailor and improve existing law to appropriately distinguish between traditional regional banks and more complex and interconnected bank holding companies that may present system risk to the financial system. The bill would also give regulators the ability to use business model standards, which are already used in other contexts, to designate banks as systemic risks. No longer would the regulators use the arbitrary $50 billion asset threshold.

Luetkemeyer, who is a member of the House Financial Services Committee and Vice Chairman of the House Small Business Committee, has earned the support of a bipartisan group of co-sponsors.