U.S. Fed plans to raise thresholds that trigger stricter bank oversight, sources say — SkimNews
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- The Federal Reserve is preparing to reindex the asset thresholds ($100B, $250B, and $700B, all set in 2019) that trigger stricter bank oversight, with a proposal expected later this year, according to four people familiar with the plan.
- Reindexing by nominal GDP would push the highest threshold to roughly $960 billion and the lower Fed-specific threshold to about $150 billion — a method Fed Vice Chair for Supervision Michelle Bowman floated in January.
- U.S. Bancorp, Capital One, PNC Financial, and Truist — closest to the $700B ceiling — would gain more room to grow without triggering the toughest Fed oversight, including aspects of new incoming capital rules and daily supervisory reporting.
- Western Alliance, Zions, and Pinnacle Financial Partners would also benefit: Western Alliance and Zions could grow past $100B without incurring all current requirements, while Pinnacle ($100B–$150B) could shed some requirements entirely.
- Crossing the $100B asset mark typically costs banks tens of millions annually in compliance staffing, risk management systems, stress-testing capabilities, and regulatory reporting infrastructure, lenders told the source.
- M&A deal flow has stalled in this segment — only 33 acquisitions were announced by lenders in the $50B–$700B range over the past decade, with seven deals last year including Fifth Third's $10.9 billion Comerica purchase — and bank lawyers expect the reindexing to break that holding pattern.
- The plan is part of the Trump administration's broader bank oversight reform, and Bowman is simultaneously overhauling capital rules alongside the threshold reindexing; Democrats counter that Congress already softened the rules in 2018.
Why it matters: Four regional lenders closest to the $700B ceiling — U.S. Bancorp, Capital One, PNC, and Truist — get years of growth runway without absorbing tens of millions in annual compliance costs, while the broader reset could thaw the frozen mid-cap M&A market where only 33 deals in the $50B–$700B band closed over the past decade.
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