Fed draws line in sand on easing big banks’ burden
By John Heltman
The Federal Reserve Board’s proposal Wednesday to revamp many aspects of its post-crisis regulatory framework was as much about what the central bank left out of the plan. As expected, the biggest winners are regional banks with assets of $100 billion to $250 billion. The Fed sought to differentiate those banks, as well as some above the $250 billion cutoff, from the eight largest “global systemically important banks.” …Karen Shaw Petrou, managing partner at Federal Financial Analytics, said the emphasis on reducing compliance burdens for regionals in the $100-$250 billion range was appropriate, particularly dropping superfluous requirements such as the “advanced approaches” modeling used to calibrate capital levels for smaller banks. Petrou noted that the Fed’s differentiating certain large banks from the largest systemically important institutions is an important distinction, giving the market a sign that a failure of a regional bank could be resolved by the Federal Deposit Insurance Corp. without much trouble.