Sources: Fed plans to raise bank regulatory thresholds

PANews reported on September 25 that the Federal Reserve is developing a plan to raise the asset threshold that triggers stricter supervision of large banks. This move will save some lenders from expensive additional regulatory costs and may promote industry consolidation.

The Federal Reserve is expected to soon propose recalibrating the thresholds for banks to be subject to balance sheet stress tests, liquidity, capital and other stricter regulatory rules to reflect inflation and economic growth, people familiar with the matter said. The Fed is expected to propose those adjustments later this year, three of the people said. Current rules stipulate that when a bank's asset size reaches US$100 billion, regulatory requirements will become more stringent; at US$250 billion and US$700 billion, regulatory requirements will be further increased. Lenders say the thresholds, set in 2019, have failed to keep pace with the economy, leaving banks facing increasingly stringent regulations that exceed the risks they actually pose.