The TAILOR Act of 2023 is designed to make banking regulations less burdensome, especially for smaller financial institutions. The law requires federal banking regulators to customize their oversight and rules based on how risky a bank actually is and what kind of business it does. Instead of applying the same strict rules to all banks regardless of size, regulators must now tailor their approach so that smaller or lower-risk institutions don't face unnecessary compliance costs. This requirement applies not just to new regulations going forward, but also to rules that were adopted in the past seven years, meaning regulators may need to revisit and adjust recent rules.

The bill also gives community banks some relief by reducing paperwork requirements for banks that qualify for a simplified capital leverage ratio—basically, these banks won't have to file as many financial reports to regulators. Additionally, the law requires federal banking agencies to study and report back to Congress on how they're modernizing their supervision practices, including whether they have enough trained examiners and whether any new laws might help them supervise banks more effectively. Overall, this bill aims to strike a balance between keeping the financial system safe while reducing regulatory red tape for smaller institutions that pose lower risks.

TAILOR Act of 2023

Rounds, Mike

Taking Account of Institutions with Low Operation Risk Act of 2023 or the TAILOR Act of 2023 This bill addresses the supervision of financial institutions. Federal financial regulatory agencies must (1) tailor any regulatory actions so as to limit burdens on the institutions involved,&nbsp;with consideration of the risk profiles and business models of those institutions; and (2) report to Congress on specific actions taken to do so, as well as on other related issues. The bill's&nbsp;tailoring requirement applies to future regulatory actions and to regulations adopted within the last seven years. The bill also reduces certain reporting requirements for community banks eligible for a simplified capital leverage ratio. Finally, federal banking agencies must report on the modernization of bank supervision, including examiner workforce and training and statutory changes necessary to achieve more effective supervision.