WASHINGTON — Just who is "too big to fail" these days?

By drawing a line at $100 billion in assets, and promising to give the 19 institutions over that mark enough capital to weather an economic downturn, the government appears to have defined which banks are indeed "too big to fail."

But is that too simplistic a measure? Are institutions like Regions Financial Corp., GMAC LLC and SunTrust Banks Inc. in the same category as Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co.?

"It's unclear whether" all 19 are "really that critical to the financial system that their failure or a slow resolution wouldn't be the best way to handle these institutions," said Gerald Hanweck, a finance professor at George Mason University and formerly an economist with the Federal Reserve Board.

The Treasury Department, Hanweck said, has "blurred the line where a company is systemically so important that they need to be maintained to fully support the payment system and making loans."

Of the 19 companies regulators tested under adverse economic scenarios, 10 were required to raise additional capital. If any of these companies cannot raise it privately, the Treasury has said it would step in with support.

"This program is designed to ensure that these major banking institutions have sufficient capital to perform their critical role in our financial system on an ongoing basis and can support economic recovery, even under an economic environment that is more challenging than it currently anticipated," regulators said in announcing the test in February.

Even if the Treasury did not intend for the exercise to delineate which institutions are "too big to fail," that was how it was perceived by much of the public.

"Treasury became so concerned about how the stress test would be interpreted — and the fact that if banks were found to need more capital, they would be interpreted as weak and having failed — that they felt by necessity, to avert another one of those major down cycles, they simply said, 'We're going to support all of these 19 banks going forward,' which effectively becomes a de facto 'too big to fail,' " said Kevin Jacques, the chairman in finance at Baldwin-Wallace College and a former Treasury economist.

While it is clear the government would rush to protect the giants — B of A, Citi, Chase and probably Wells Fargo & Co. — many observers said regional players like Regions and SunTrust or specialized institutions like State Street Corp., should not be in the same category. Regions, SunTrust and State Street all are smaller than Washington Mutual Inc.'s $307 billion-asset thrift operation, which the Federal Deposit Insurance Corp. resolved in September in the largest bank failure ever.

"You can argue that the government is sending the signal that these banks will not be allowed to fail. Having said that, if you actually look at the names of these institutions, it's a varied group," said Toos Daruvala, the head of the Americas Banking and Securities Practice for McKinsey & Co.

"Some of them are truly in the 'too big to fail' category, in the sense that failure would lead to massive systemic issues. Some of them are midsize, regional banks, which you could argue the FDIC has shown plenty of ability to take into receivership and unwind in an orderly fashion."

Richard Herring, a finance professor at the Wharton School, said characteristics of some firms — such as Citi — make their qualification obvious.

Those include a large international operation and a sense that a bank is too interconnected with other firms to unwind easily.

"If it's an institution that has lots of foreign assets or assets in the holding company, then effectively … you can't take out the bank without creating very big spillover effects," Herring said. "For example," Citi "has 2,400 majority-owned subsidiaries in eight different countries."

But, he added, "If most of their operations are in the U.S., like Wamu, and relatively few of their assets are in the holding company — again, like Wamu — the FDIC has a perfectly good resolution mechanism for taking care of them."

Other firms on the list also should not have a guarantee, he said, citing the auto finance company GMAC, which received bank holding company status last year to qualify for capital from the government under the Troubled Asset Relief Program. "GMAC was not even a bank until the Fed had an emergency meeting in December to make it one," Herring said. "That's clearly there for political reasons, not for systemic ones."

Exactly which firms are really "too big to fail" is hard to pin down. There is a consensus around the top four institutions, but after that it is largely a guessing game. Goldman Sachs Group and Morgan Stanley — the two former investment banks that converted to bank holding company status last year — are widely viewed as "too big to fail," partly because the failure of the last large investment firm, Lehman Brothers, is credited with worsening the economic crisis.

But is MetLife Inc., the giant insurance firm, "too big to fail"?

"For every reason that AIG would be too big to fail then MetLife would be as well," said Arthur Wilmarth Jr., a law professor at George Washington University. "You couldn't have that company fail, even if it didn't have a bank."

How about the $290 billion-asset PNC Financial Services Group Inc., the fifth-largest banking company in the country? Would it be considered sufficiently interconnected with other firms for the government to step in, or would its resolution be relatively straightforward like Wamu's?

"I would have said PNC - before picking up National City - would have been on the bubble," Wilmarth said. "Once they picked up National City, that moved them well into the range of U.S. Bancorp, being a $250-$300 billion institution, which is a pretty big institution at that point."

Still, few expect the list to remain static. After the stress tests become a distant memory, "we can go back and revisit the whole question of 'too big to fail,' " Jacques said. "I think the Treasury and the Federal Reserve are going to try and break that link. … They are going to find a way to make aware to the public that these 19 banks are not 'too big to fail,' because they're clearly not."

That, too, may bring added risk, observers said. Suggesting that these institutions are "too big to fail" — and then effectively trying to remove that designation — may cause confusion.

"The key is going to be: How do you remove the safety net?" said Cornelius Hurley, a former Fed lawyer and now the director of the Morin Center for Banking and Financial Law at Boston University's law school. "At some point in time presumably they're going to have to go through the analysis that they should have done in the first place, which is: Some of these are 'too big to fail,' and some are not."

Some continue to argue the government should eliminate the problem once and for all.

There should be a "countervailing cost to those banks that will make them think twice about being too big, too complex, or too interconnected to fail," Herring said. "We don't really want to tolerate having banks like that around indefinitely."

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