Summary of HR 3380 - TAILOR Act of 2025

Overview

The Taking Account of Institutions with Low Operation Risk Act of 2025, commonly referred to as the TAILOR Act of 2025, aims to adjust regulatory frameworks for financial institutions based on their specific risk profiles and business models. The bill was introduced in the House of Representatives on May 14, 2025, and has been reported (amended) by the Committee on Financial Services as of June 4, 2025.

Purpose and Intent

The primary objective of the TAILOR Act is to ensure that federal financial regulatory agencies consider the unique characteristics of different financial institutions when implementing regulations. This approach is intended to reduce unnecessary regulatory burdens on institutions that pose lower operational risks, thereby fostering a more flexible and responsive financial environment.

Key Provisions

The TAILOR Act includes several significant provisions:

1. Tailoring Regulations:

   • Federal financial institutions regulatory agencies must consider the risk profile and business models of institutions when taking regulatory actions.
   • Agencies are required to tailor regulations to minimize the impact on institutions, including costs and resource allocation.

2. Consideration Factors:

   • Agencies must evaluate the aggregate effects of regulatory actions on institutions' ability to serve customers and local markets.
   • Consideration of potential conflicts between regulatory actions and third-party service provider actions is mandated.

3. Reporting Requirements:

   • Agencies must document how they applied the tailoring requirements in notices of proposed and final rulemaking.
   • Annual reports to Congress are required, detailing actions taken to tailor regulations.

4. Review of Existing Regulations:

   • A review of regulations issued in the past 15 years will be conducted to determine if they can be revised to align with the new tailoring requirements, with revisions due within three years of enactment.

5. Short-Form Call Reports:

   • The bill mandates reduced reporting requirements for banks eligible for the Community Bank Leverage Ratio, streamlining their reporting processes.

6. Report on Modernization of Supervision:

   • A report on the modernization of bank supervision must be submitted to Congress within 18 months of enactment, addressing changes in bank business models and supervisory practices.

Affected Parties

The TAILOR Act primarily impacts:
- Federal Financial Regulatory Agencies: Including the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, and others.
- Financial Institutions: Especially those classified as having low operational risk, such as community banks and credit unions, which may benefit from reduced regulatory burdens.
- Consumers and Local Markets: By potentially enhancing the ability of institutions to serve their communities effectively.

Legislative Timeline

• May 14, 2025: Bill introduced and referred to the Committee on Financial Services.
• May 21, 2025: Committee consideration and mark-up session held; ordered to be reported with amendments.
• June 4, 2025: Reported (amended) by the Committee on Financial Services and placed on the Union Calendar.

Conclusion

The TAILOR Act of 2025 represents a significant shift in how financial regulations may be applied, emphasizing a more nuanced approach that considers the operational risks of institutions. By tailoring regulations, the bill aims to promote a healthier financial ecosystem that can better serve consumers and local economies.