A panel of U.S. financial regulators said March 13 that it would grant hearings to bank holding companies seeking to escape their designation as systemically important, and the enhanced regulatory supervision that comes with it.
The Financial Stability Oversight Council (FSOC) said in a draft Federal Register notice that it would grant hearings to bank holding companies that want to show significant changes to their corporate structure and balance sheets that could allow the firms to get out of extra capital and other standards.
The changes took effect immediately, but the FSOC, which is currently chaired by Treasury Secretary Steven Mnuchin, wants to get public input on the hearing process. The comment period will close 30 days after the FSOC notice appears in the Federal Register.
Other changes to the designation and de-designation process for systemically important financial institutions (SIFIs) may also be in store, according to the FSOC notice.
The 2010 Dodd-Frank Act mandated that any bank holding company with $50 billion in assets or more was considered systemically important, meaning that its potential failure posed a potential threat to the broader financial system.
Many of the smaller SIFIs, including those hovering around the $50 billion asset threshold, have argued that they should not be subjected to the raised capital and supervisory standards that global banking giants like JPMorgan Chase & Co. and Bank of America Corp. operate under. That argument has gained support among regulators, lawmakers, and former lawmakers, including former Rep. Barney Frank (D-Mass.), one of Dodd-Frank’s namesakes.
The FSOC changes may not be necessary if a Senate bill (S. 2155) that would change the asset threshold for designating a bank holding company systemically important from Dodd-Frank’s $50 billion to $250 billion becomes law. Both Frank and former Sen. Chris Dodd (D-Conn.) say that raising the SIFI threshold to $250 billion is too high and have opposed the bill.
The bipartisan bill, which would free around two dozen banks from enhanced regulation and supervision, is expected to pass out of the Senate this week. The House is expected by many to pass it without many changes to preserve Democratic support it needs to become law.
To contact the reporter on this story: Evan Weinberger in New York at email@example.com
To contact the editor responsible for this story: Michael Ferullo at firstname.lastname@example.org
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)