Although the HFSC Subcommittee on Consumer Protection and Financial Institutions hearing today was convened to discuss draft bills, including one to overhaul the nonbank SIFI designation process, these were not substantively discussed. Full Committee Chairwoman Waters (D-CA) briefly attended to warn financial regulators that the committee will pursue legislation limiting their ability to deregulate if they continue to advance proposals to weaken SIFI designation (see FSM Report SIFI32), stress testing (see FSM Report STRESS29), leverage capital (see FSM Report LEVERAGE13), and living will (see FSM Reports LIVINGWILL19 and LIVINGWILL20) standards. Turning to cloud-service risk (see Client Report CYBER28), full committee Ranking Member McHenry (R-NC) suggested that bank use of cloud service providers can reduce risk and Reps. Velázquez (D-NY) and Foster (D-IL) argued that overreliance presents systemic risk. Rep. Foster suggested requiring banks to connect to at least two cloud service providers; FRB Gov. Brainard agreed that redundancy is generally a good practice. She also confirmed that global regulators are working on cloud-service prudential policy.
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