Lawmakers urge Fed to follow through on reg relief for midsize banks

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WASHINGTON — Nearly 30 House Republicans are calling on the Federal Reserve Board to use new authority to relieve all banks with less than $250 billion of assets from enhanced supervision that was established after the crisis.

The recent regulatory law raised the asset threshold for "systemically important financial institutions" from $50 billion, but gave the Fed discretion to continue subjecting banks between $100 billion and $250 billion to heightened measures.

In a letter dated Friday, the 30 House members — led by Rep. Barry Loudermilk, R-Ga. — called on the Fed to de-designate all firms with less than $250 billion of assets.

“Due to the fact that there have been no past or present findings of systemic risk, we strongly believe that the Fed should take quick action to completely remove these firms, both domestic and international, from all SIFI-associated regulations,” the members said in the letter, which was addressed to Fed Vice Chairman of Supervision Randal Quarles.

Quarles, along with Federal Deposit Insurance Corp. Chair Jelena McWilliams, Comptroller of the Currency Joseph Otting, and National Credit Union Administration Chairman J. Mark McWatters, will testify to the Senate Banking Committee Tuesday on their progress in implementing the reg relief law — known as S 2155.

Fed Chairman Jerome Powell has said previously that the Fed will continue to review firms between $100 billion to $250 billion to determine if they should be subject to enhanced prudential standards. And Quarles has said the Fed is working on a framework to determine how to regulate those banks.

“We are concerned that you have expressed the intention to further review these firms in order to determine how to regulate them. ... While we fully recognize the need to monitor systemic risk and to take action in cases where risks to financial stability and/or safety and soundness emerge, the lack of any current risk posed by these firms provides a sound basis for such action in the immediate future,” the letter said.

The House letter follows a similar effort by some Republicans in the Senate. A group of seven senators, led by Sen. David Perdue, R-Ga., sent a letter in August urging the Fed to stand by the law's intent of subjecting only banks with systemic importance to the most rigorous supervisory procedures developed after the crisis.

Those senators were similarly concerned that the Fed would continue to broadly apply stress test requirements for banks with assets of $100 billion to $250 billion.

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Regulatory relief SIFIs Regional banks Randal Quarles Jerome Powell Federal Reserve House Financial Services Committee Senate Banking Committee
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