Federal Reserve Plans Higher Asset Thresholds for Bank Oversight
The proposed changes could reduce additional compliance costs for some lenders and encourage industry consolidation as inflation and economic growth reshape the banking sector.
The Federal Reserve is developing a plan to raise the asset thresholds that trigger stricter oversight of large banks, potentially reducing additional compliance costs for some lenders and encouraging industry consolidation.
The central bank is expected to propose the changes later this year. The adjustments would apply to thresholds for balance-sheet stress tests, liquidity requirements, capital rules and other enhanced regulations.
The proposed revisions would account for inflation and economic growth. Under the current framework, regulatory requirements become more stringent when a bank's assets reach $100 billion, with additional increases at $250 billion and $700 billion.
The thresholds were established in 2019. Lenders have argued that they have not kept pace with economic growth and have resulted in requirements that exceed the risks posed by some banks.
If the thresholds are raised, some lenders could face fewer additional compliance costs. The changes could also encourage consolidation across the banking industry, although the Federal Reserve has not yet formally proposed the revisions.
