Like Countable?

Install the App
TRY NOW

house Bill H.R. 241

Should State and Federal Banking Regulators Coordinate Examinations of Banks to Avoid Unnecessary Duplication?

Argument in favor

Duplicative regulatory examinations by state and federal regulators are a burden on banks, particularly smaller institutions. Increasing coordination between state and federal regulators will avoid unnecessary duplication and allow them to focus on the business of meeting customers’ financial needs.

Argument opposed

While duplicative regulatory examinations may be tiresome for banks, the lessons of the past, where regulatory failures contributed to the 2008 financial crisis, indicate that redundancy in bank regulations are needed to protect customers.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
      senate Committees
      Committee on Banking, Housing, and Urban Affairs
  • The house has not voted
      house Committees
      Committee on Financial Services
    IntroducedJanuary 4th, 2019

What is House Bill H.R. 241?

This bill — the Bank Service Company Examination Coordination Act of 2019 — would require state banking agencies to coordinate with federal banking agencies in regulating and examining the activities of bank service companies. It would also allow for the sharing of information related to examinations and regulations between federal and state agencies to avoid unnecessary duplication.

Impact

Banks; state banking agencies; federal banking agencies; bank regulators; coordination between state and federal bank regulators; and information-sharing between state and federal bank regulators.

Cost of House Bill H.R. 241

Last Congress, the CBO estimated that this bill’s net budgetary cost would be insignificant over the 2019-2028 period.

More Information

In-DepthRep. Roger Williams (R-TX) reintroduced this bill from the 115th Congress to reduce the burden on both regulators and those they examine.

The Conference of State Bank Supervisors (CSBS), the nationwide organization of state regulators from all 50 states, American Samoa, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands, supports this bill. In a letter to Rep. Williams when this bill was under consideration last Congress, CSBS president and CEO John W. Ryan wrote: 

“This legislation will enhance state and federal regulators’ ability to coordinate examination of and share information on banks’ technology vendors in an effective and efficient manner… The Bank Service Company Act (BSCA) authorizes federal regulators to examine TSPs to assess the potential risks they pose to individual client banks and the broader banking system.  Currently, 38 states have similar authority under state law. We note that this bill does not create any new authority at the state level. The BSCA is silent regarding authorities and/or roles of state banking regulators. The BSCA silence results in duplication and inefficient supervision. Amending the BSCA to appropriately reflect states’ authority to examine TSPs will improve state-federal coordination and information sharing and promote more efficient supervision of TSPs that provide critical services to a broad range of banks… Exam coordination and improved information sharing among state and federal regulators will allow regulators to use limited resources more effectively to avoid duplicative examinations and reduce regulatory burden.”

Writing in MarketWatch in September 2018, Caroline Baum argued that the 2008 financial crisis was largely a failure by regulators to enforce existing regulations. Baum argued that regulators’ failures to see banks’ and financial institutions’ risky investments for what they were contributed to the financial crisis. In some cases, regulators became friends with the people they were supposed to be regulating and failed to exercise their duties responsibility —  and due to understaffing and lack of redundancy in the regulatory system at the time, there wasn’t any way to catch these issues.

This legislation has one cosponsor, Rep. Greg Meeks (D-NY), in the 116th Congress. Last Congress, it passed the House Committee on Financial Services by a 56-0 vote with the support of five bipartisan cosponsors, including three Republicans and two Democrats.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / utah778)

AKA

Bank Service Company Examination Coordination Act of 2019

Official Title

To amend the Bank Service Company Act to provide improvements with respect to State banking agencies, and for other purposes.

    I fully support and recommend passage of this bill. Avoiding duplication whether it’s regulations, laws in Congress, IRS, EPA, HUD, DOD or wherever I support. I want our tax dollars spent wisely like I must do at home. #MAGA
    Like (4)
    Follow
    Share
    I'M SURPRISED A REPUUBLICAN WOULD INTODUCE SUCH A BILL, CONSIDERING THE WAY THEY FEEL ABOUT REGULATIONS AND THAT THEIR DE-REGULATION OF BANKS HELPED BRING ON THE GREAT RECESSION! THERE MUST BE SOME DE-REGULATION HIDDEN IN IT SOMEWHERE! IT'S WHAT THE GOP LOVES TO DO!
    Like (2)
    Follow
    Share
    Duplicative regulatory examinations by state and federal regulators are a burden on banks, particularly smaller institutions. Increasing coordination between state and federal regulators will avoid unnecessary duplication and allow them to focus on the business of meeting customers’ financial needs.
    Like (1)
    Follow
    Share
    I oppose on the grounds of states rights.
    Like
    Follow
    Share
    Yes, but the better question is why is this duplicative effort mandated in the first place. One of these regulators should step aside.
    Like
    Follow
    Share