Banks win power to argue out of safety rules under 'tailoring' bill
S. 427 — TAILOR Act of 2025 · Filed by Mike Rounds (R-SD) · 7 cosponsors · Introduced Feb 5, 2025 · Referred to committee
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What it does
This bill requires federal banking regulators (the OCC, Federal Reserve, FDIC, NCUA, and CFPB) to consider the risk profile and business model of financial institutions when writing new rules, and to tailor regulations to limit burden on institutions proportional to their risk. Regulators must document how they applied this tailoring in every rulemaking notice and report annually to Congress on actions taken. The bill also requires a 7-year lookback review of existing regulations to identify which ones should be tailored or repealed.
Why we flagged it
The bill's operative mechanism is a statutory mandate requiring regulators to reduce regulatory burden on financial institutions by tailoring rules to risk profiles. While framed as 'tailoring' (a neutral-sounding term), the bill functionally constrains regulators' ability to apply uniform safety standards and shifts discretion toward institutions' own characterization of their risk.
What the text implies
- The bill allows institutions to argue that rules designed for systemic stability are 'disproportionate' to their claimed risk profile, creating litigation and rulemaking pressure to exempt or weaken protections for mid-sized banks.
- The 7-year lookback review may repeal or weaken post-2008 financial crisis regulations (Dodd-Frank era rules) without explicit congressional action, effectively delegating deregulation to agencies under a 'tailoring' mandate.
The full analysis lists 5 implications of this text.
Who stands to gain
regional and community banks; mid-sized financial institutions; credit unions