TAILOR Act of 2025
The Tailor Act of 2025 (TAILOR Act) would require the five federal financial regulators (OCC, Federal Reserve, FDIC, NCUA, and CFPB) to tailor any regulatory action after enactment to the risk profile and business model of each institution or class of institutions affected. In practice, this means regulators would assess how a rule or regulation would impact different types of banks and adjust the regulatory burden (costs, staffing needs, and other burdens) accordingly. The bill also requires transparency in rulemaking by showing in proposed and final rules how tailoring was applied, and it imposes annual reporting to Congress on tailoring efforts. A limited look-back provision would force regulators to review and revise regulations issued in the prior 15 years to align with the Act, with revisions due within three years. Additional provisions would (1) create a reduced reporting requirement for banks eligible for the Community Bank Leverage Ratio (CBLR) in specific quarterly reports, and (2) compel a modernization of supervision study within 18 months, covering topics like changing bank models, examiner staffing, and supervisory technology.
Key Points
- 1Tailoring regulation by risk profile and business model: Regulators must consider the risk characteristics and business models of institutions when crafting regulatory actions after enactment, and tailor the action to limit burdens where appropriate.
- 2Burden and flexibility focus: Tailoring must aim to limit regulatory impact, costs, human resources, and other burdens in line with the institution’s risk profile and business model.
- 3Factors to consider: Agencies must assess overall impact on the ability to serve customers locally, potential undermining effects from third-party actions, and the statutory/policy objectives behind the regulation.
- 4Transparency in rulemaking: Proposed and final rule notices must explain how tailoring and the factors were applied.
- 5Legislative oversight: Agencies must report to Congress annually on actions taken to tailor regulatory actions.
- 6Limited look-back: Agencies must review final regulations issued during the 15 years prior to the Act’s enactment and revise them to comply with the tailoring requirements within 3 years.
- 7Short-form Call Reports for CBLR banks: Agencies must establish a reduced reporting requirement for all banks eligible for the Community Bank Leverage Ratio for the first and third Call Reports of the year.
- 8Modernization of supervision: A report due within 18 months must cover changes in bank business models, examiner staffing and training, structure of supervisory activities, supervisory technology, and needs for community banks, plus recommended statutory changes.