U.S. Rep. Blaine Luetkemeyer (MO-03) issued the following release after the House Financial Services Committee passed H.R. 1309, the Systemic Risk Designation Improvement Act, by a bipartisan vote.

“Dodd-Frank was billed as the solution to curtailing risk in the financial system, yet the regulatory maze that resulted doesn’t bother to evaluate risk. I am pleased that my colleagues on the House Financial Services Committee understand the importance of my legislation, which would more closely tailor the regulation of financial institutions on actual risk rather than asset size alone. As a former bank examiner, I understand the importance of standards that account for risk and the varying structures of small, mid-size, regional and large financial institutions. Today’s bipartisan vote on H.R. 1309 and the amendment offered by Rep. Carolyn Maloney (D-NY), shows that there is near unanimous recognition from Financial Services Committee members that the process for designating bank holding companies as systemically important financial institutions, and Dodd-Frank itself, need to be changed.” 

“H.R. 1309 was just one part of streamlining and rationalizing our financial regulatory system.  More needs to be done. Our system places too many institutions in regulatory boxes that are inappropriate given their risk profiles and business models. The criteria used in SIFI designations and across our regulatory spectrum, including in the Advanced Approaches Capital Framework and the Liquidity Coverage Ratio, are out of date and employ a one-size-fits-all approach. These processes need to be modernized and properly tailored. I look forward to continuing to work in a bipartisan fashion to address these issues.”

Luetkemeyer’s legislation would enhance the criteria used in the designation of systemically important financial institutions (SIFIs) are based on actual risk posed to the system.  Under H.R. 1309, federal financial regulators would be required to consider not just an individual institution’s size but also its global activity, interconnectedness, complexity, and the extent of readily available substitutes for the institution’s services.