US Fed Plans to Raise Bank Oversight Thresholds: Reuters
The plan could ease compliance costs and spur dealmaking as some banks gain room to grow before facing tougher Fed oversight.
- The Federal Reserve is developing a plan to raise asset thresholds that trigger stricter oversight of large banks, accounting for economic growth and inflation, according to four people familiar with the matter.
- Lenders argue current thresholds set in 2019 haven't kept pace with the economy, subjecting banks to excessive oversight; President Donald Trump's administration is pursuing this reform effort to reduce regulatory burden.
- The plan could push the highest threshold to around $960 billion and the lower threshold for additional requirements to roughly $150 billion, compared to current levels of $100 billion, $250 billion, and $700 billion.
- Midcap and regional banks may see unlocked merger and acquisition activity, said James Stevens, partner at Troutman Pepper Locke, as banks like PNC Financial and Truist stand to benefit from more growth room.
- Critics argue consolidation harms consumers by reducing competition, while Democrats note Congress already softened rules in the 2010 Dodd-Frank Act; Fed vice-chair for supervision Michelle Bowman has suggested reindexing using nominal GDP.
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According to insider reports, the Fed plans higher thresholds for strict banking rules. This could save large institutions bureaucracy costs. Critics warn of growing financial risks.
US Federal Reserve plans to raise bank oversight thresholds, sources say
The US Federal Reserve is set to propose an increase in the asset thresholds for banking regulations, potentially raising the current $700 billion limit to around $960 billion. This adjustment could benefit lenders by reducing compliance costs and easing regulatory burdens for banks near the threshold. However, analysts caution that such changes may spur consolidation among mid-sized banks, which could undermine competition and elevate systemic …
The Federal Reserve (Fed, the U.S. Central Bank) is developing a plan to raise asset limits that trigger tighter supervision of large banks, according to four people on the subject, which will allow some financial institutions to avoid additional costly regulations and potentially stimulate consolidation. Exclusive subject matter for subscribers. To have full access, access the link to the subject and register.
US Fed plans to raise bank oversight thresholds, sources say
The US Federal Reserve is working on a plan to raise the asset thresholds that trigger stricter oversight of big banks, four people with knowledge of the matter said, which would allow some lenders to avoid costly additional regulation and potentially spur consolidation.
The Federal Reserve analyses updating asset limits that trigger tighter controls for banks, a change that could reduce regulatory costs and modify incentives to grow or merge.
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