This story appeared in Bank Digest.
Representative Blaine Luetkemeyer (R-Mo) reintroduced the Systemic Risk Designation Improvement Act, which would more closely base the regulation of financial institutions on risk rather than arbitrary asset size. The legislation would enhance the criteria used to make Systemically Important Financial Institution, or SIFI, designations to ensure that those with the SIFI designation, and therefore subject to stricter regulatory standards, are those institutions that are not only large in size, but also globally interconnected and complex.
"This legislation supports economic growth in the country because not only does it allow our community and regional banks to lend without certain burdens of lending, but it more closely bases the regulation of financial institutions on risk rather than arbitrary asset size," Luetkemeyer said. "After decades of being in the community banking and insurance businesses, I know firsthand the importance of creating standards that account for risk and the varying structures of small, mid-size, and large financial institutions. Decisions on what institutions are deemed systemically important should be based not on size alone, but also on activity and other factors that actually demonstrate systemic risk."