In this report, we assess how a plan to ring-fence U.S. banks by line of business might be implemented.  Comments from the White House last week and FDIC Vice Chair Hoenig’s Monday release (see Client Report FHC23) reinforce our initial forecast that a Vickers-style realignment will have significant traction in the U.S. with both populists and progressives.  This approach – which we call FHC-heavy – provides cover for other actions that could be characterized as “unduly favorable to Wall Street” while at the same time getting strong support from community banks and – depending on critical details – much of the rest of the U.S. financial-services industry other than large, diversified banks and foreign financial institutions.  This report thus addresses how the strategic landscape would be reshaped by an FHC-heavy policy with or without a ten percent leverage standard and other make-or-break provisions.

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