This bill would prohibit federal banking agencies from establishing an operational-risk capital requirement (i.e. money & non-cash assets that have to be held in reserve) for banks unless the requirement: 1) is based on, and is appropriately sensitive to, current risks; 2) is determined under a forward-looking assessment of potential losses — rather than only considering historic losses current law; and 3) allows certain adjustments.
What is House Bill H.R. 4296?
Cost of House Bill H.R. 4296
In-Depth: Sponsoring Rep. Blaine Luetkemeyer (R-MO) introduced this bill to set parameters for federal financial regulators when establishing operational risk capital requirements:
“Operational risk capital requirements were first agreed to at the Basel Committee and then implemented in the United States by the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve. Like many concepts created by the Basel Committee, the original intent may have been authentic but the implementation has brought about unintended consequences. My legislation will instill confidence by instituting clear guardrails for operational risk capital requirements that focus on an institution’s current activities and businesses. I thank my colleagues in the House Financial Services Committee for supporting this legislation and working to ensure capital standards are effective and appropriately tailored.”
Some House Democrats opposed this bill, with several explaining their opposition to what they’ve dubbed a “big bank giveaway” in the bill’s committee report:
“According to bank regulators and the Treasury Department, efforts have been underway internationally to make administrative and technical refinements to the operational risk capital requirement, and we should expect changes in the near future. Congress should closely monitor these developments to see if regulators strike the right balance, and if not, then consider a legislative response. Thus, H.R. 4296 is premature and possibly short-sighted to enact statutory conditions regarding the operational risk capital requirement. This framework would diminish, instead of strengthen, the incentive for megabanks to maintain stronger internal controls and risk management systems.”
- Sponsoring Rep. Blaine Luetkemeyer (R-MO) Press Release
- CBO Cost Estimate
- Republican Policy Committee
- Bureau of National Affairs
Summary by Eric Revell(Photo Credit: scyther5 / iStock)
To place requirements on operational risk capital requirements for banking organizations established by an appropriate Federal banking agency.
- Not enactedThe President has not signed this bill
- The senate has not voted
Committee on Banking, Housing, and Urban Affairs
- senate Committees
- The house Passed February 27th, 2018Roll Call Vote 245 Yea / 169 Nay
Committee on Financial ServicesIntroducedNovember 8th, 2017
- house Committees