Regional Banks Push Back on ‘Systemically Important’ Label

By Rob Tricchinelli

Regional banks will make a public push to lawmakers for raising the threshold for what is considered a “systemically important financial institution” subject to greater government scrutiny.

“We certainly do not consider ourselves to be systemically important to the United States economy,” advance hearing testimony from Harris H. Simmons, chairman and chief executive of Zions Bancorporation, says. “We in fact half-jokingly refer to our company as an ‘Itty Bitty SIFI.’”

Simmons will testify in the Senate Banking Committee on behalf of the Regional Bank Coalition, representing more than a dozen banks, most of which have more than $100 billion in total assets.

Home States

The group’s members include Huntington Bancshares Inc. and Fifth Third Bancorp., which are headquartered in Ohio, home of the panel’s ranking Democrat, Sen. Sherrod Brown. Other members include Regions Financial Corp. and BBVA Compass Bancshares Inc., which are headquartered in Alabama, represented by the committee’s former chairman, Sen. Richard Shelby (R).

Regional banks have long sought relief from the $50 billion threshold, which was created by Title I of the 2010 Dodd-Frank Act. A June 12 Treasury Department report supported raising that threshold but didn’t specify a new level.

When he was still chairman, Shelby proposed raising the level to $500 billion as part of a legislative package that was approved by the committee in a party-line vote but never reached the floor.

His successor, Sen. Mike Crapo (R-Idaho), voted for that bill but hasn’t articulated his preferred approach to the SIFI question beyond wanting “a more appropriate standard,” as he said in a May hearing. Zions, with roughly $63 billion in total assets, has a large presence in Idaho.

Regulatory Compliance

“The capital reserves we ask those banks to have is unnecessary,” Sen. David Perdue (R-Ga.), another member of the Banking Committee, told Bloomberg BNA in an interview. “The regulatory requirements of compliance are outrageous for small banks and regional banks. Those two things alone are what I hear more than anything else.”

Georgia is home to another Regional Bank Coalition member, SunTrust Inc., which has more than $200 billion in total assets, according to its most recent quarterly filing.

Also testifying is Robert R. Hill Jr., chief executive officer of South State Corp., on behalf of the Mid-Size Bank Coalition of America, which represents scores of banks averaging $20 billion in total assets.

That group is calling for repeal of a Dodd-Frank stress test requirement for banks with less than $50 billion in assets.

To contact the reporter on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com

To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com

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