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House subcommittee presses for tailored bank supervision, limits on subjective examiner discretion
Summary
Witnesses and members at a House Financial Services subcommittee hearing urged Congress and regulators to restore risk‑based tailoring in bank supervision, tighten appeals for exam findings, and increase transparency about international regulatory engagements such as Basel and the NGFS.
The House Financial Services Subcommittee on Financial Institutions met June 3 to examine what lawmakers called regulatory overreach and the costs it imposes on community financial institutions. Subcommittee Chair Barr opened the hearing by saying community banks have been “crushed by the weight of burdensome and politically driven regulations,” and invited witnesses to recommend reforms.
Why it matters: Members and witnesses said one‑size‑fits‑all supervision and an opaque exam process impose large compliance costs on small and regional banks, discourage new charters and competition, and risk diverting supervisory focus away from material financial threats to subjective judgments about management and reputational concerns.
Bank Policy Institute witness Sarah Flowers, senior vice president and senior associate general counsel, said “there's an urgent need to index regulatory tailoring thresholds for all banks for economic growth and inflation,” and argued supervision must…
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