Today, U.S. Rep. Blaine Luetkemeyer (MO-03) reintroduced the Systemic Risk Designation Improvement Act, which would more closely base the regulation of financial institutions on risk rather than asset size alone.

“This legislation supports economic growth throughout the country because it will free commercial banks to make loans while allowing financial regulators the ability to apply enhanced standards on banks based on actual risk posed to the financial system – rather than on arbitrary asset size alone,” Luetkemeyer said. “An inefficient regulatory system based on an arbitrary threshold can have real economic consequences. Last Congress, my colleagues recognized the importance of this issue when the House of Representatives passed similar legislation with bipartisan support. I look forward to ushering in a regulatory regime that more effectively and thoughtfully safeguards against risk.”

This legislation replaces the inflexible $50 billion threshold for designation of a bank holding company as a Systemically Important Financial Institution (SIFI) with a series of well-established standards that more accurately measure systemic importance. More specifically, this legislation requires that the Federal Reserve review an institution’s size, interconnectedness, substitutability, global cross-jurisdictional activity, and complexity before determining whether that institution should be subject to the full SIFI regulatory regime.

Luetkemeyer has introduced this legislation in the 113^th and 114^th Congresses with House passage last Congress.