US Fed plans to raise bank oversight thresholds, sources say
XLF•The Federal Reserve is working on a plan to reindex bank oversight thresholds, potentially raising the $700 billion threshold to around $960 billion and the lower threshold for additional requirements to roughly $150 billion. The proposal could come later this year and may spur consolidation among mid-size banks.
1. Possible threshold changes
The Fed is expected to propose reindexing thresholds for stricter bank oversight to account for inflation and economic growth. Current thresholds are $100 billion, $250 billion and $700 billion in assets; the Fed is considering moving the highest closer to $1 trillion and some requirements at the lower threshold closer to $150 billion.
2. Banks and potential deals
U.S. Bancorp, Capital One, PNC Financial and Truist are among lenders closest to the $700 billion threshold. Western Alliance and Zions could grow beyond $100 billion without facing all requirements currently imposed in that category, while Pinnacle Financial Partners and some other lenders between $100 billion and $150 billion could shed requirements. Sources said the changes could encourage mid-size bank consolidation.
3. Rules and debate
The plan is part of a broader effort by the Trump administration to reform bank oversight. A 2018 law softened some Dodd-Frank requirements, while the Fed has discretion over additional capital planning, liquidity and reporting rules. Critics of consolidation argue it could reduce competition and services and increase systemic risks.
