U.S. Senator Katie Britt Introduces TIER Act to Modernize Outdated Bank Regulatory Thresholds

Legislation would ensure key regulatory thresholds keep pace with economic growth WASHINGTON, D.C . — U.S. Senator Katie Britt (R-Ala.), a member of the Senate Committee on Banking, Housing, and Urban Affairs, today introduced the Tailoring and Indexing Enhanced Regulations (TIER) Act , legislation to modernize outdated asset-based thresholds in federal banking law and ensure the nation’s regulatory framework keeps pace with economic growth. “Bank regulation should be based on an institution’s actual size, complexity, and risk, not on arbitrary thresholds that become increasingly outdated with every passing year,” said Senator Britt. “When our economy grows but these thresholds remain frozen in place, banks can be pushed into regulatory categories that Congress never intended for them to be simply because of economic growth. The TIER Act provides a commonsense solution that preserves strong safety and soundness standards while ensuring our regulatory framework remains appropriately tailored and grounded in economic reality. Ultimately, that means greater certainty for financial institutions and more opportunity for them to invest in families, small businesses, and communities across Alabama and our nation.” Many of the asset thresholds Congress established to tailor enhanced federal banking regulations are fixed dollar amounts that do not automatically keep pace with the U.S. economy. As banks grow alongside the economy, they can cross these thresholds and become subject to significantly more complex and costly regulatory requirements even when their relative size, business model, and risk have not meaningfully changed, which can result in unnecessary consequences for families and businesses. The TIER Act addresses both the growth that has already occurred and future economic growth. The legislation would make a one-time adjustment to certain key statutory thresholds to reflect historical economic growth and would then establish a process for periodically updating covered thresholds going forward. When banks are required to hold additional capital solely because they have crossed an outdated regulatory threshold, that is capital they cannot fully put to work elsewhere in the economy. It can reduce banks’ capacity to make loans to small businesses, finance mortgages and car purchases, and support investment in local communities. The TIER Act would help ensure regulatory requirements remain aligned with an institution’s actual size and risk, preserving strong safeguards while allowing more capital to support Alabama families and businesses. The TIER Act would also require the Federal Reserve to evaluate whether nominal gross domestic product or the Consumer Price Index is the more appropriate measure for each covered threshold and periodically adjust those thresholds to reflect future economic growth. Together, the one-time catch-up and prospective indexing are designed to prevent statutory thresholds from remaining fixed indefinitely as the economy grows. The Senate TIER Act builds on the TIER Act provisions included in the House-passed Main Street Capital Access Act , led by House Financial Services Committee Chairman French Hill (R-Ark.) and Financial Institutions Subcommittee Chairman Andy Barr (R-Ky.). The Main Street Capital Access Act passed the House on July 21 by a 270-155-1 vote. The House-passed legislation established a framework for periodically updating regulatory thresholds as the economy grows. The Senate legislation maintains that forward-looking approach while restoring a one-time adjustment for historical economic growth that was included in the original House proposal. Senator Britt has consistently advocated for a regulatory framework tailored to a financial institution’s size, complexity, and risk. In July, she raised directly with Federal Reserve Chair Kevin Warsh the need to modernize outdated tailoring frameworks and provide greater regulatory certainty as banks grow alongside the economy. Chair Warsh agreed on the importance of modernizing the regulatory framework and appropriately tailoring rules. Senator Britt looks forward to continuing to work with Chair Warsh and hopes the Federal Reserve will build on that commitment by ensuring key regulatory thresholds keep pace with economic growth. ###