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Panelists Call to Modernize Payments and Reporting Rules, Cite Outdated Regs and Burdens
Summary
Panelists told Federal Reserve staff that parts of operational regulation (funds-availability rules, routing/exclusivity and check-processing assumptions) are outdated and that reporting requirements (FR Y-14, CRA uncertainty) impose disproportionate burdens on smaller banks; they suggested harmonization and process fixes as immediate steps.
Speakers at the Federal Reserve panel urged agencies to modernize operational regulations and remove long-standing frictions in payments and supervisory reporting.
Tyler Mandre (American Bankers Association) said certain operational rules written decades ago no longer reflect how banks and customers transact and cited routing and exclusivity requirements that followed 2022 amendments as creating contractual and operational burdens. He also said parts of the funds-availability framework continue to reference “non-local checks” even though the Federal Reserve consolidated check processing years ago.
Panelists flagged high reporting costs (for example, FR Y-14 reporting) and inconsistent examiner interpretation across agencies. They said harmonizing interagency Q&A and exam procedures, clarifying reporting expectations, and streamlining the FR Y-14 process would reduce burdens without compromising supervisory insight.
Practical fixes discussed included indexing thresholds, aligning holding-company and IDI thresholds, exploring shorter review cycles for some rules, and pursuing process changes (harmonized guidance, FAQs) as near-term measures. Panelists noted that some operational improvements (for example, using instant-payment rails for faster posting of small transactions) could be implemented without new regulatory burdens.
Close: Witnesses offered to assist agency staff with implementation ideas and said the review is an opportunity to prioritize process changes that can be completed more quickly than statutory reforms.
