Blaine Luetkemeyer: “Today, the House will consider H.R. 6392, the Systemic Risk Designation Improvement Act of 2016, legislation to address…”

“Today, the House will consider H.R. 6392, the Systemic Risk Designation Improvement Act of 2016, legislation to address an inefficient regulatory structure by accounting for actual risk, rather than asset size alone, in the designation of systemically important financial institutions, or SIFIs. Under the current regulatory framework for the designation of SIFIs, any bank holding company with more than $50 billion in assets is subject to enhanced regulatory supervision and special assessments. This approach fails to take into account differences in business models or risk imposed to the financial system. It has real-world implications, too, stunting economic growth and limiting access to credit. The risk of a traditional bank is not the same as an internationally active, complex firm. H.R. 6392 would remove the completely arbitrary approach and replace it with analysis of actual risk imposed to the financial system. {time} 1330 More specifically, my legislation would require regulators to examine not just size, but also interconnectedness, the extent of readily available substitutes, global cross-jurisdictional activity, and complexity of each bank holding company. These are metrics that are presently being used by the Financial Stability Board and the Office of Financial Research to determine what a G-SIFI is, a Global Systemically Important Financial Institution. This bill number may be new, but the concept is not.…”