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The fight over the Dodd-Frank threshold for enhanced regulations is the first big legislative battle for a loose coalition of regional banks.
February 20 -
There's a growing push to revisit how banks are determined to be "systemically important" under the Dodd-Frank Act, but questions about how to resolve the problem still loom large.
October 8
WASHINGTON A group of midsize banks is preparing to oppose a bill eliminating a key Dodd-Frank Act threshold unless the language is further tweaked.
The Mid-Size Bank Coalition of America sent a letter Monday to Rep. Blaine Luetkemeyer, R-Mo., raising concerns with the lawmaker's recent bill to replace the $50 billion threshold for enhanced prudential standards with a more qualitative evaluation based on risk and business activity. Specifically, the bill does not include language maintaining that any banks under $50 billion of assets cannot be designated as systemically important.
"Eliminating a clear line of exemption in favor of regulatory discretion will, by definition, introduce uncertainty, lack of clarity and, quite possibly, a higher cost of doing business," the group said in the letter addressed to Luetkemeyer.
The trade group, composed of more than 50 banks with $10 billion to $50 billion of assets, supported an earlier version of the bill introduced by Luetkemeyer last Congress that did keep the exemption for banks under $50 billion, as laid out in Dodd-Frank.
That legislation gained more than 80 bipartisan co-sponsors.
The midsize banks added that removing the exemption for all banks under $50 billion "would invite regulators to extend rules that are designed for the largest financial institutions in the world to banks that could not remotely present a threat to the U.S. economy" and that doing so could "encourage regulatory 'scope creep'" from rules for the megabanks to smaller institutions.
Efforts to remove or raise the $50 billion SIFI threshold have also come under fire more broadly by consumer advocates who warn that regional banks, while not part of Wall Street, still pose a threat to the economy.
Meanwhile, some in the industry, including Federal Reserve Board Gov. Daniel Tarullo and former Rep. Barney Frank, have joined regional banks in arguing that the $50 billion provision should be given another look.
The Senate Banking Committee is slated to take up the issue at two hearings later this month, which could shed more light on where panel members and Chairman Richard Shelby, R-Ala., stand on the issue.
