S.427 - Taking Account of Institutions with Low Operation Risk Act of 2025; TAILOR Act of 2025 (119th Congress)
Summary
S.427, the TAILOR Act of 2025, aims to modify the regulatory landscape for financial institutions by requiring federal regulatory agencies to consider the risk profiles and business models of institutions when taking regulatory actions. The bill mandates that regulations be tailored to limit the regulatory impact on institutions, considering factors like cost and resource allocation. It also includes provisions for reporting to Congress on actions taken to tailor regulations and a review of existing regulations.
Expected Effects
The likely effect of this bill is a reduction in the regulatory burden on smaller financial institutions, particularly community banks. This could lead to increased lending and investment in local communities. The bill also aims to streamline reporting requirements for eligible banks, potentially reducing compliance costs.
Potential Benefits
- Reduced regulatory burden for smaller financial institutions, potentially freeing up resources for lending and investment.
- Streamlined reporting requirements for community banks, decreasing compliance costs.
- Increased flexibility for institutions to serve their customers and local markets.
- Greater consideration of the specific risk profiles and business models of different types of institutions.
- Enhanced communication and collaboration between banks and supervisors through modernization of supervision.
Potential Disadvantages
- Potential for increased risk-taking by financial institutions due to reduced regulatory oversight.
- Difficulty in accurately assessing and tailoring regulations to the diverse risk profiles of all institutions.
- Possible inconsistencies in the application of regulations across different agencies.
- Increased complexity in the regulatory process due to the need for tailoring.
- Risk that third-party service provider actions may undermine efforts to tailor regulations.
Constitutional Alignment
The bill appears to align with the Constitution's broad goals of promoting the general welfare by fostering a stable and efficient financial system. Congress has the power to regulate commerce, including financial institutions, under Article I, Section 8. The requirement for agencies to report to Congress ensures accountability and oversight, consistent with the legislative branch's role in shaping policy.
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).