The Federal Reserve and Its Efforts to Reduce Regulatory Burden
April 16, 2018
The Fed recognizes the need to promote and ensure an efficient and effective supervisory function. In an effort to tailor supervision and reduce regulatory burden, the Fed has taken the following actions.
Streamlining the Applications and Reporting Process
- Initiated the evaluation of the applications process to identify opportunities for efficiencies.
- Reduced the number of items that need to be reported in FR Y-9C, the Consolidated Financial Statements for Holding Companies.
- Eliminated FR Y 2052b, the Liquidity Monitoring Report.
- Increased “off-site” examination work to minimize on-site disruption.
Improving Coordination with Other Regulators
It has been a long-standing tenet of the Fed to coordinate with other regulators in order to reduce burden and duplicative efforts. In recent years, it has made further strides in this effort by working to align supervisory planning schedules with other regulators of regional banks. In addition, for small, noncomplex holding companies, the Fed relies significantly on the primary regulator’s assessment of the subsidiary bank or thrift.
Using a More Tailored Approach
A more tailored approach is also an important consideration of the Fed in how it supervises organizations based on size, complexity, risk, condition and availability of information from the insured depository institution’s primary regulator. In 2016, for all firms under $50 billion in consolidated assets, the Fed issued SR 16-11, which explicitly requires examiners to apply appropriate guidance to each particular institution, considering its unique scope and complexity of its activities. In 2017, the Fed implemented enhanced prudential standard rule changes to remove the qualitative portion of the Comprehensive Capital Analysis and Review for noncomplex firms with assets greater than $50 billion. It also instituted an abbreviated review approach for Dodd-Frank Act company-run stress tests for regional banks whose programs have historically met regulatory requirements and undergone minimal change since prior reviews.
The Fed continues to look for opportunities to reduce regulatory burden without compromising the safety and soundness of the financial system and consumer protection responsibilities.