The Senate Banking Committee today held its second hearing on the way regional banks should be regulated – if at all – as systemically-important financial institutions (SIFIs). Honing in on an issue he raised last week, Chairman Shelby (R-AL) argued that criteria outlined in a recent OFR report – criteria that argue big banks are even more systemic than the current G-SIB standards show – should replace the $50 billion asset threshold. This would, he said, avoid an arbitrary threshold yet still capture higher-risk banks. Pending House legislation (see FSM Report SYSTEMIC76) adopts the global SIFI-designation criteria, creating a possible starting point for legislation. However, Democrats continued to oppose substantive change to the Dodd-Frank $50 billion threshold, with Ranking Member Brown (D-OH) making it clear that the GOP will need to compromise with Democrats to craft any legislation in this area.
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