The Federal Reserve is preparing a plan to raise the asset thresholds that trigger tougher oversight for large banks, according to four people familiar with the matter cited by BlockBeats. The move would ease costly additional compliance burdens for some lenders and could also encourage consolidation across the banking sector. Sources said the Fed is expected to soon propose recalibrating the thresholds tied to balance-sheet stress tests, liquidity, capital and other stricter regulatory requirements, with the changes intended to reflect inflation and economic growth. Three of the four sources said the proposal is expected later this year. Under current rules, regulatory requirements become more stringent once a bank reaches $100 billion in assets, and tighten again at $250 billion and $700 billion. Lenders have argued that those thresholds, set in 2019, have not kept pace with economic expansion and have subjected banks to increasingly strict requirements beyond the risks they actually pose.
The Federal Reserve is drafting a plan to raise the asset thresholds that trigger stricter oversight for large banks, according to four people familiar with the matter cited by BlockBeats on Sept. 25.
The change would spare some lenders from costly additional regulatory burdens and could also drive consolidation in the industry.
Proposal would cover stress tests, liquidity and capital rules
Sources said the Fed is expected to soon propose recalibrating the thresholds that determine when banks must face balance-sheet stress tests, liquidity requirements, capital rules and other tougher supervisory standards. The adjustment is intended to reflect inflation and economic growth factors.
Three of the four sources said the Fed is expected to put forward the changes later this year.
Current framework uses three asset levels
Under the current rules, oversight becomes more stringent when a bank reaches $100 billion in assets. Requirements tighten again at $250 billion and $700 billion.
Lenders said those thresholds, set in 2019, have failed to keep pace with economic growth, leaving banks subject to increasingly strict regulation beyond the level of risk they actually present.
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