Tailoring and Indexing Enhanced Regulations Act of 2025; TIER Act of 2025
Summary
The Tailoring and Indexing Enhanced Regulations Act of 2025 (TIER Act) proposes to adjust statutory thresholds in several key financial regulations to account for historical and future increases in the United States Gross Domestic Product (GDP). This bill amends the Federal Reserve Act, the Bank Holding Company Act of 1956, the Financial Stability Act of 2010, and the Economic Growth, Regulatory Relief, and Consumer Protection Act. The core mechanism involves increasing existing thresholds and establishing a framework for periodic adjustments every five years, starting in 2031, based on GDP growth.
Expected Effects
The TIER Act aims to tailor financial regulations to the current economic landscape by indexing thresholds to GDP. This adjustment could reduce the regulatory burden on smaller institutions while maintaining oversight of larger entities. The periodic adjustments will ensure that regulations remain relevant as the economy evolves.
Potential Benefits
- Reduces regulatory burden on institutions that fall below the adjusted thresholds.
- Ensures regulations remain relevant by adjusting for economic growth.
- Provides clarity and predictability through a defined adjustment mechanism.
- Potentially stimulates economic activity by freeing up capital for lending and investment.
- Streamlines regulatory processes by aligning thresholds with current economic realities.
Most Benefited Areas:
Potential Disadvantages
- May increase risk to the financial system if thresholds are set too high.
- Could lead to regulatory arbitrage as institutions seek to remain below the thresholds.
- The complexity of the adjustment mechanism may create uncertainty.
- Potential for unintended consequences due to unforeseen economic shifts.
- The five-year adjustment period may not be responsive enough to rapid economic changes.
Constitutional Alignment
The TIER Act aligns with the constitutional mandate to promote the general welfare (Preamble). Congress has the power to regulate commerce (Article I, Section 8, Clause 3), which includes the financial sector. The Act does not appear to infringe on individual liberties or rights protected by the Bill of Rights. The periodic adjustments are delegated to the Board of Governors, Comptroller of the Currency, and the Corporation, which is constitutional as long as Congress provides clear standards for implementation.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).