House Panel to Consider Bill Altering Systemic Risk Label

By Rob Tricchinelli

Legislation to change the way banks are labeled “systemically important” is among the measures to be considered during a sprawling 23-bill markup in the House Financial Services Committee Oct. 11.

During the markup, which could easily last several days, lawmakers will consider bills dealing with emerging growth companies, broker-dealers, micro offerings, and initial public offerings.

Some of the bills were included in the Financial Choice Act (H.R. 10), a wide-ranging measure offered by Committee Chairman Jeb Hensarling (R-Texas) as a replacement to the Dodd-Frank Act. That package passed the House in June.

The markup reflects a new effort by Hensarling and other House leaders to move more modest legislation in piecemeal fashion, in hopes of attracting bipartisan support. Democratic backing is important to overcome 60-vote thresholds in the Senate, given Republicans’ slim majority in that chamber. In 2017, Congress and President Donald Trump have enacted into law several such bills tweaking securities laws, which had bipartisan backing.

Financial Stability

A bill on systemic importance (H.R. 3312), sponsored by Rep. Blaine Luetkemeyer (R-Mo.), would remake the process used by the Financial Stability Oversight Council to manage systemic risk in the financial sector.

It is an updated version of legislation previously introduced by Luetkemeyer that would relieve regional and mid-sized banks from some regulatory scrutiny, an effort that has the backing of several Democrats on the committee, including Reps. Gregory Meeks (N.Y.), David Scott (Ga.), and Kyrsten Sinema (Ariz.).

The bill would undo a Dodd-Frank Act requirement that all banks with more than $50 billion in assets are by definition “systemically important.” Banks labeled “global systemically important” under federal rules would still have to abide by extra regulations, but other individual banks would be subject to additional requirements only if the Fed decided to impose them.

The Fed would then be able to put more scrutiny on banks based on their size, interconnectedness, uniqueness, global presence and complexity.

To contact the reporter on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.