79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–588 

TAKING ACCOUNT OF INSTITUTIONS WITH LOW 

OPERATION RISK ACT OF 2017 

MARCH 6, 2018.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 1116] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 1116) to require the Federal financial institutions regulatory agencies to take risk profiles and business models of institutions into account when taking regulatory actions, and for other 

purposes, having considered the same, report favorably thereon 

without amendment and recommend that the bill do pass. 

PURPOSE AND SUMMARY

On February 16, 2017, Representative Scott Tipton introduced 

H.R. 1116, the ‘‘Taking Account of Institutions with Low Operation 

Risk Act of 2017’’ or ‘‘TAILOR Act of 2017’’, which directs the federal financial institutions regulatory agencies (the Office of the 

Comptroller of the Currency (OCC), the Board of Governors of the 

Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Bureau of Consumer Financial Protection 

(CFPB)) to tailor their rulemakings in consideration of the risk profiles and business models of the financial institutions that are subject to such rules. The TAILOR Act also directs these agencies to 

annually report to Congress and testify before the Committee on 

Financial Services and the Committee on Banking, Housing, and 


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Urban Affairs regarding the specific actions taken to tailor their 

regulatory actions. 

BACKGROUND AND NEED FOR LEGISLATION

The goal of H.R. 1116 is to have federal financial regulatory 

agencies that regulate financial institutions move away from a 

static or one-size-fits all approach when the agency implements 

regulations and instead engage in dynamic oversight of financial 

institutions and consider additional factors such of an institution 

such as its risk profile, unintended potential impact of implementation of such regulations, and underlying policy objectives of the 

statutory scheme which led to the regulation. 

The growing weight and complexity of regulation for community 

financial institutions affects their ability to provide the products 

and services necessary to allow small businesses to grow and consumers to access credit to realize their financial and personal goals. 

The regulatory burden falls into three major categories: (1) additional operational costs associated with compliance; (2) restrictions 

on fees, interest rates, or other revenue; and (3) unintentional barriers to offering a service due to regulatory complexity. Smaller institutions are disproportionately affected by increased regulation 

because they are less able to absorb additional costs. Compliance 

with new regulations is expensive. After a regulation has been finalized, an institution must hire lawyers to review its procedures 

and forms to ensure that it complies with the regulation; coordinate its compliance activities and design internal audit programs; 

train its employees; buy additional information technology; design, 

print, and mail or electronically deliver new forms and other disclosures; monitor its employees’ compliance with new rules; and make 

records and employees available for regulatory examinations. 

Although the intent of the Dodd-Frank Wall Street Reform and 

Consumer Act’s reforms was to reach large, global, interconnected 

and complex U.S. financial institutions, the Dodd-Frank Act and 

the resulting regulatory regime have had a demonstrable—and 

highly adverse—impact on small, community-based financial institutions. For example, community bankers report a ‘‘trickle-down effect, where regulation originally meant for big institutions is being 

applied to smaller banks,’’ often in the form of bank examiners 

identifying those regulations as ‘‘best practices’’ that should be followed by institutions regardless of their size. 

Some federal financial regulators have acknowledged the need to 

tailor the regulatory regime to institutions. For example, in September 28, 2016, testimony before the Committee, former Federal 

Reserve Chair Janet Yellen stated: ‘‘[W]hen it comes to bank regulation and supervision, one size does not fit all. To effectively promote safety and soundness and to ensure that institutions comply 

with applicable consumer protection laws without creating undue 

regulatory burden, rules and supervisory approaches should be tailored to different types of institutions such as community banks.’’ 

And, in an April 30, 2015, speech, former Federal Reserve Board 

Governor Daniel Tarullo noted ‘‘the importance of differentiating 

prudential regulation and supervision based on the varying nature 

of the risks posed by different groups of banks . . . . At an analytic 

level, we need to be clear that prudential aims vary with the risks 

posed by diverse groups of banks.’’ 


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A 2015 study from researchers at Harvard University’s Kennedy 

School of Government entitled ‘‘The State and Fate of Community 

Banking,’’ noted the ‘‘increasingly complex and uncoordinated regulatory system [embodied by Dodd-Frank] has created an uneven 

regulatory playing field that is accelerating consolidation [among 

community financial institutions] for the wrong reasons.’’ The 

study described a post-financial crisis competitive landscape characterized by ‘‘community banks’ declining market share in several 

key lending markets, their decline in small business lending volume, and the disproportionate losses being realized by particularly 

small community banks.’’ An April 2015 study by economists at 

Goldman Sachs reached a similar conclusion about the ‘‘passthrough’’ effects of post-crisis banking regulations on small businesses that rely heavily on the community banking sector for their 

funding: 

The weight and burden from increased bank regulation falls disproportionately bank customers, such as smaller businesses that 

have few alternative sources of finance. The muted recovery in 

bank lending to small businesses cannot be overemphasized. Outstanding commercial and industrial (C&I) loans for less than $1 

million are still well below the peak 2008 level and are only 10% 

above the trough seen in 2012. In contrast, larger C&I loans outstanding (above $1 million) are more than 25% higher than the 

peak in 2008. Moreover, the cost of the smallest C&I loans has 

risen by at least 10% from the pre-crisis average. The evidence suggests that smaller firms continue to borrow from banks—when they 

can get credit—because they lack effective alternative sources of finance. It also suggests that they are paying notably more for credit 

today; this weighs on their ability to compete with larger firms and 

to create new jobs. 

The current Presidential administration supports regulatory tailoring. In President Trump’s February 2017 Executive Order entitled ‘‘Core Principles for Regulating the United States Financial 

System’’ one of the seven principles was to ‘‘make regulation efficient, effective, and appropriately tailored.’’ In June 2017, the Department of the Treasury released its first report in response to the 

President’s Executive Order to inform the Administration’s perspective to regulate the financial system. The report entitled, ‘‘A Financial System That Creates Economic Opportunities-Banks and 

Credit Unions’’ found that ‘‘[b]anks and credit unions are confronted with a vast array of regulatory requirements, putting a 

substantial burden on financial and human capital. Most critically, 

regulatory burdens must be appropriately tailored based on the 

size and complexity of a financial organization’s business model 

and take into account risk and impact.’’ 

H.R. 1116 requires the federal financial institution regulatory 

agencies (the OCC, Federal Reserve, FDIC, NCUA, and CFPB) to 

tailor any regulatory action that occurs after the legislation’s enactment to appropriately apply to banks and credit unions. The agencies would be required to consider the risk profile and business 

model of the institutions and determine the necessity, appropriateness, and impact of applying such regulatory action to those institutions. Not only will the TAILOR Act ensure appropriately tailored compliance obligations for banks and credit unions of various 

risk profiles, but the legislation will also save valuable time and reVerDate Sep 11 2014 04:42 Mar 07, 2018 Jkt 079006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\HR588.XXX HR588

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sources for bank and credit union examiners. It is important to foster a regulatory environment where banks and credit unions can 

focus their time and assets in their surrounding communities and 

make long-term investments, rather than devote their limited financial and human resources to comply with an ever-increasing 

and overly burdensome regulatory regime that reportedly was 

never supposed to impact smaller banks and credit unions. 

By allowing the federal regulators to weigh the compliance impact, cost, and liability risk, together with the unintended consequences of regulations in the aggregate, consumers will directly 

benefit. Tailored adjustments to appraisal and escrow provisions, 

for example, would encourage banks to make loans they currently 

cannot afford to make. Small business customers would see more 

efficient and expedited loan procedures, ultimately stimulating the 

local economy. Regulators would also have the flexibility to deem 

loans in portfolio as compliant with ‘‘Qualified Mortgage’’ and 

‘‘Ability to Repay’’ rules, allowing loans not otherwise made to be 

accessed by low-income, rural, retiree, or the recently employed 

segments of the consumer lending market. H.R. 1116 is the embodiment of smart regulation, which will promote small financial institution competition and foster consumer choice and competitive 

lending. 

HEARINGS

The Committee on Financial Services held a hearing examining 

matters relating to H.R. 1116 on April 26, 2017, and April 28, 

2017. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on October 11, 2017, October 12, 2017, and ordered H.R. 1116 to be reported favorably to the without amendment by a recorded vote of 

39 yeas to 21 nays (Record vote no. FC–74), a quorum being 

present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. The sole recorded 

vote was on a motion by Chairman Hensarling to report the bill favorably to the House without amendment. The motion was agreed 

to by a recorded vote of 39 yeas to 21 nays (Record vote no. FC– 

74), a quorum being present. 


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COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the Committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 1116 will require federal financial institutions regulatory agencies tailor their 

regulatory actions as to take into consideration factors such as risk 

profile, unintended potential impact of implementation of such regulations, and underlying policy objectives. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, December 12, 2017. 

Hon. JEB HENSARLING, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1116, the TAILOR Act of 

2017. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Sarah Puro and Stephen Rabent (for federal costs) and Nathaniel Frentz (for revenues). 

Sincerely, 

KEITH HALL, 

Director. 

Enclosure. 

H.R. 1116—TAILOR Act of 2017 

Summary: H.R. 1116 would require the federal banking regulators—the Federal Deposit Insurance Commission (FDIC), the Office of the Comptroller of the Currency (OCC), the National Credit 

Union Administration (NCUA), the Consumer Financial Protection 


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Bureau (CFPB), and the Federal Reserve—to adapt their regulatory actions to the specific risk profiles and business models of financial institutions that are subject to regulation. That requirement would apply to any new regulatory action. The bill also would 

require the federal banking regulators to review and revise regulatory actions from the past seven years, including those written 

under the Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). 

CBO estimates that enacting the legislation would increase the deficit by $80 million over the 2018–2027 period. That amount 

comprises an increase in direct spending of $56 million and a reduction in revenues of $24 million. Because enacting the bill would 

affect direct spending and revenues, pay-as-you-go procedures 

apply. CBO also estimates that reviewing rules issued by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) would cost $3 million over the 

2018–2022 period; such spending would be subject to the availability of appropriated funds. 

CBO estimates that enacting H.R. 1116 would not increase net direct spending or on-budget deficits by more than $2.5 billion in 

any of the four consecutive 10-year periods beginning in 2028. 

H.R. 1116 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA). Additional fees imposed by the OCC, the NCUA, and the SEC increase the cost of the 

existing mandate on private entities that are required to pay those 

assessments. However, CBO estimates that the incremental cost of 

the mandate would fall well below the annual threshold established in UMRA for private-sector mandates ($156 million in 2017, 

adjusted for inflation). 

Estimated cost to the Federal Government: The estimated budgetary effect of H.R. 1116 is shown in the following table. The costs 

of this legislation fall within budget function 370 (commerce). 

By fiscal year, in millions of dollars— 

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018– 

2022 

2018– 

2027 

INCREASES IN DIRECT SPENDING 

Estimated Budget Authority .. 5 10 10 8 3 4 4 4 4 4 36 56 

Estimated Outlays ................. 5 10 10 8 3 4 4 4 4 4 36 56 

DECREASES IN REVENUES 

Estimated Revenues .............. ¥2 ¥3 ¥4 ¥3 ¥2 ¥2 ¥2 ¥2 ¥2 ¥2 ¥13 ¥24 

NET INCREASE IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES 

Effect on the Deficit .............. 7 13 14 11 5 6 6 6 6 6 49 80 

INCREASES IN SPENDING SUBJECT TO APPROPRIATION 

Estimated Authorization Level 1 1 1 0 0 0 0 0 0 0 3 3 

Estimated Outlays ................. 1 1 1 * 0 0 0 0 0 0 3 3 

Components may not sum to totals because of rounding; * = between zero and $500,000. 

Basis of estimate: H.R. 1116 would require the federal banking 

regulators to consider the risk profiles and business models of financial institutions when determining which institutions are subject to regulatory action and to adapt regulations to the characteristics of individual financial institutions. The agencies would be required to review and analyze all regulations adopted during the 

prior seven years, in accordance with the requirements in H.R. 


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1See DavisPolk, Dodd-Frank Progress Report: Six-Year Anniversary Report (July 2016), 

http://tinyurl.com/ycovbwpx (PDF, 1.2 MB). 

1116, and to revise those regulations, if necessary, to comply with 

the bill. 

Costs incurred by the FDIC, the NCUA, and the OCC are recorded in the budget as increases in direct spending. Those agencies are authorized to collect premiums and fees from insured depository institutions to fully cover such administrative expenses, although CBO expects that only a portion of the costs incurred by the 

FDIC would be recouped by 2027. 

The CFPB is permanently authorized to spend amounts transferred from the Federal Reserve. Because that activity is not subject to appropriation, the CFPB’s expenditures are recorded in the 

budget as direct spending. Costs to the Federal Reserve System reduce remittances to the Treasury; they are recorded in the budget 

as revenues. 

To develop this estimate, CBO consulted with the federal financial regulators about the number of people needed to review and 

revise regulations and about the regulations adopted over the past 

seven years. 

Direct spending and revenues 

The financial regulators have completed more than 200 rules 

over the past seven years, many of them associated with the DoddFrank Act.1 The bill would require the financial regulators to review and possibly revise those rulemakings. In addition, CBO expects that H.R. 1116 could increase the amount of litigation that 

those regulators are subject to under the Administrative Procedures Act because regulated institutions would have additional 

grounds to challenge the application of financial regulations. 

The cost to implement the bill has two components. First, CBO 

expects that the financial regulators would have to hire additional 

staff over the 2018–2021 period to complete the required review 

and revision of previous rulemakings. Subsequently, the regulators 

would require additional staff to support new rulemaking and to 

defend agency actions from additional litigation. 

CBO expects that over the 2018–2021 period each of the financial 

regulators would need to increase its legal staff by 5 percent to 10 

percent and certain other staff by less than 1 percent to complete 

the analysis of the regulations promulgated over the past seven 

years. Currently, the agencies have a total of about 6,000 employees, including 600 attorneys, on staff in their Washington, D.C., offices. CBO expects that overall staffing would increase by 60 employees over the 2018–2021 period. 

After 2020, CBO expects that the regulators would no longer 

need all of the additional staff that they needed to complete the review of existing regulations, however, spending by the financial 

regulators to carry out new rulemakings and to defend agency actions from new litigation would increase. Over the 2020–2027 period CBO expects that implementing the bill would require roughly 

25 additional employees across the federal financial regulators. The 

OCC and the NCUA likely would recover any implementation costs 

over the next ten years by increasing assessments on the instituVerDate Sep 11 2014 04:42 Mar 07, 2018 Jkt 079006 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\HR588.XXX HR588

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tions they regulate, and the FDIC would recover most of its costs 

after 2027. 

In total, CBO estimates that enacting the bill would increase deficits by $80 million over the 2018–2027 period. That amount includes an increase in net direct spending of $56 million and a decrease in revenues of $24 million because the Federal Reserve 

would reduce its remittances to the Treasury. 

Spending subject to appropriation 

Implementing H.R. 1116 would probably require the CFTC and 

the SEC to review regulations adopted under the Dodd-Frank Act. 

Using information from the affected agencies, CBO estimates that 

they would require four additional employees over the 2018–2021 

period. Because the SEC is authorized under current law to collect 

fees sufficient to offset its annual appropriation, we estimate that 

the net costs to the SEC would be negligible, assuming appropriation actions consistent with that authority. CBO expects that costs 

to the CFTC would total $3 million over the 2018–2022 period; 

such spending would be subject to the availability of appropriated 

funds. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays and revenues that are subject to those pay-asyou-go procedures are shown in the following table. 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 1116, AS ORDERED REPORTED BY THE 

HOUSE COMMITTEE ON FINANCIAL SERVICES ON OCTOBER 12, 2017 

By fiscal year, in millions of dollars— 

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018– 

2022 

2018– 

2027 

NET INCREASE IN THE DEFICIT 

Statutory Pay-As-You-Go Impact ................................... 7 13 14 11 5 6 6 6 6 6 49 80 

Memorandum: 

Changes in Outlays ...... 5 10 10 8 3 4 4 4 4 4 36 56 

Changes in Revenues ... ¥2 ¥3 ¥4 ¥3 ¥2 ¥2 ¥2 ¥2 ¥2 ¥2 ¥13 ¥24 

Increase in long-term direct spending and deficits: CBO estimates that enacting the legislation would not increase net direct 

spending or on-budget deficits by more than $2.5 billion in any of 

the four consecutive 10-year periods beginning in 2028. 

Mandates: H.R. 1116 contains no intergovernmental mandates as 

defined in UMRA. 

CBO expects that the financial regulators would increase premiums or fees to offset the costs of implementing the additional 

regulatory activities required by the bill. Any increase in premiums 

or fees would increase the cost of the existing mandate on entities 

required to pay those assessments. Using information from the federal banking regulators and the SEC, CBO estimates that the incremental cost to comply with the mandate would fall well below 

the annual threshold established in UMRA for private-sector mandates ($156 million in 2017, adjusted for inflation). 

Estimate prepared by: Federal costs: Sarah Puro and Stephen 

Rabent; Revenues: Nathaniel Frentz; Mandates: Logan Smith. 


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Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995. 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

DUPLICATION OF FEDERAL PROGRAMS

In compliance with clause 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program; 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139; or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

pursuant to the Federal Program Information Act (Pub. L. No. 95– 

220, as amended by Pub. L. No. 98–169). 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, (115th Congress), the following statement is made concerning directed rulemakings: The 

Committee estimates that the bill requires no directed rulemakings 

within the meaning of such section. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section cites H.R. 1116 as the ‘‘Taking Account of Institutions with Low Operation Risk Act of 2017’’ 


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Section 2. Regulations appropriate to business models 

This section states the directives that the federal financial institutions regulatory agencies (Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Fed), the Federal Deposit Insurance Corporation (FDIC), the 

National Credit Union Administration (NCUA), and the Consumer 

Financial Protection Bureau (CFPB) must consider when imposing 

regulations on institutions. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

H.R. 1116 does not repeal or amend any section of a statute. 

Therefore, the Office of Legislative Counsel did not prepare the report contemplated by clause 3(e)(1)(B) of rule XIII of the House of 

Representatives. 


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MINORITY VIEWS 

H.R. 1116, the ‘‘Taking Account of Institutions with Low Operation Risk (TAILOR) Act,’’ would take a major step backwards on 

the progress made since the 2008 Financial Crisis to ensure our financial markets are stronger, more resilient, and more protective 

of consumers. 

The Dodd-Frank Wall Street Reform and Consumer Protection 

Act (Dodd-Frank Act) establishes a tiered and tailored regulatory 

framework for financial institutions. Instead of imposing a one-sizefits-all approach for regulating all firms, the Dodd-Frank Act focuses the toughest rules on the largest and most complex financial 

firms that, as evidenced in the 2007–2009 financial crisis, can destabilize the financial system and inflict long-lasting damage to the 

economy and the constituents we serve. 

Congress has carefully monitored the implementation of the 

Dodd-Frank Act and, when warranted, has passed targeted legislation or encouraged regulators to further tailor rules to reduce unnecessary compliance requirements on community financial institutions while maintaining robust standards and appropriate protections that are in the public interest. 

If enacted, H.R. 1116 would undo these efforts by providing every 

financial institution overseen by agencies like the Federal Deposit 

Insurance Corporation (FDIC) or the Consumer Financial Protection Bureau with new opportunities to challenge rulemakings in 

court if they felt a regulation was not uniquely tailored to their individual firm. Moreover, the bill would not require regulators to 

consider the benefits of certain rulemakings, including the promotion of financial stability or the protection of consumers. 

H.R. 1116 would ignore the mandates and requirements of all 

other laws passed by Congress and would override decades of wellestablished administrative law requirements by subjecting all new 

financial rules to a vague, if not an impossible standard, to meet. 

This would include the determination of an undefined standard of 

‘‘appropriateness’’’ for each rule and how it would apply to every 

single institution. The bill would also require each regulatory action to be analyzed ‘‘both by itself and in conjunction with the aggregate effect of other regulations’’’ for its impact on how each and 

every firm can ‘‘serve evolving and diverse customer needs.’’ 

Additionally, we are concerned that the level of institution-specific tailoring under the bill could result in a severe weakening of 

the nation’s anti-money laundering and Bank Secrecy Act rules. By 

requiring that compliance costs and liability risk be considered a 

higher priority than protecting the integrity of the financial system, the bill could create a class of institutions with lowered compliance standards that might become an ideal target for drug cartel 

money laundering or terrorist financing. 


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Finally, the TAILOR Act would ignore the substantial amount of 

work that agencies have done to ensure that rules are adopted in 

a way that considers the needs of smaller financial institutions. For 

example, the federal prudential banking agencies have worked to 

minimize supervision and compliance burdens for smaller sized institutions. After completing an extensive review that is required 

every 10 years, the federal prudential banking agencies recently 

issued a sweeping report under the Economic Growth and Regulatory Paperwork Reduction Act and are making further modifications to better tailor rules for smaller, less risky firms. 

We share the belief that regulators must take into account, and 

tailor rules, for smaller sized institutions when appropriate. Unfortunately, the TAILOR Act would only serve to put consumers and 

the financial system at risk by subjecting important regulations to 

endless litigation. 

For the foregoing reasons, we oppose H.R. 1116. 

MAXINE WATERS. 

GREGORY W. MEEKS. 

KEITH ELLISON. 

AL GREEN. 

MICHAEL E. CAPUANO. 

CAROLYN B. MALONEY. 

NYDIA M. VELA ́ ZQUEZ. 

GWEN MOORE. 

WM. LACY CLAY. 

EMANUEL CLEAVER. 

BRAD SHERMAN. 

JOYCE BEATTY. 

BILL FOSTER. 

Æ 


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