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US House passes legislation requiring tailored bank regulations

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US House passes legislation requiring tailored bank regulations

In a 247-169 vote on March 14, the U.S. House of Representatives passed legislation that would require the federal banking regulators to consider the risk profile and business model of a community bank or a credit union when taking regulatory action.

The TAILOR Act, introduced by Rep. Scott Tipton, R-Colo., would also mandate an assessment of the "necessity, appropriateness, and impact" of applying a regulatory action and any costs and liability risks that may be associated with compliance. The bill would also require considerations of the impact of regulation over a given "class of institutions to serve evolving and diverse customer needs."

Regulators would also have to review all regulations adopted in the seven years prior to the bill's passage and revise any rules to comply with the TAILOR Act's provisions.

House Republicans say the bill is aimed at easing regulatory burden for community banks, which they argue are suffering from regulations implemented by the post-crisis Dodd-Frank financial regulatory framework.

"The 'one-size-fits-all' approach to regulating the financial services industry has resulted in decreased access to much-needed credit in communities across America," Tipton said in a statement March 14.

The legislation would enforce the proposed checks by requiring an annual report to both the House and the Senate detailing specific actions taken to tailor regulatory actions.

The Senate's Dodd-Frank revision bill, also passed March 14, does not include the provisions of the TAILOR Act. But House Financial Services Committee Chair Jeb Hensarling, R-Texas, has listed the TAILOR Act as one of the many House-minted bills he would like to see added to the Senate legislation.