In 1996, Congress passed legislation requiring banking agencies to address unneeded regulatory burdens.
Thirty years later, it is difficult to tell if the efforts behind the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) have been effective, the Government Accountability Office (GAO) said in a recent report.
“For example, agencies don’t have documented procedures for identifying outdated or unnecessary regulations or determining whether issues raised in reviews warrant action,” the report said. “By having documented procedures and incorporating leading practices, agencies could improve the likelihood that these reviews meaningfully reduce burdens.”
The GAO also found that banking agencies haven’t adopted practices for prioritizing which rules to analyze or for assessing the aggregated burden of multiple regulations.
That means the agencies “may not consistently focus on the most significant issues, assess regulatory impacts and trade-offs, or understand how multiple regulations collectively affect regulated entities,” the report said.
The report also includes recommendations for the Federal Reserve, Federal Deposit Insurance Corp. (FDIC) and Office of the Comptroller of the Currency (OCC).
It suggests the head of the organizaitons develop and implent documented procesues for spotting “outdated, unnecessary, or unduly burdensome regulations” and take steps to address them during the EGRPRA review.
In other banking regulation news, the Federal Reserve said earlier this month that it plans to amend its requirements for banks to maintain anti-money laundering (AML) programs.
In addition to requiring lenders to pay closer attention to higher-risk customers and activities, the central bank also plans to require them to integrate the Financial Crimes Enforcement Network’s (FinCEN) AML priorities into their risk assessment procedures.
The Fed also plans to focus its own supervision and enforcement efforts on significant failures of banks to implement their own AML programs.
Meanwhile, the House voted last week to approve The Main Street Capital Access Act, designed to reduce or modify banking regulations for smaller banks.
The legislation was backed by the banking industry and opposed by a group of 28 labor, community, consumer and public interest advocacy organizations.
In a letter to lawmakers ahead of the vote, the group said the legislation “treats bank rules as burdens to be minimized rather than what they are: essential safeguards that reduce the likelihood and severity of systemic risk, bank failures, and publicly financed bailouts, while protecting consumers from predatory practices, redlining, and other forms of racial discrimination in lending.”
