Big Banks’ Regulatory Bonanza Not as Advertised
By Aaron Back
In the early days of the Trump administration, expectations were high for sweeping financial deregulation that would be a boon to bankers. While much of that agenda has been realized, large banks have reason to be disappointed. This week marks the first anniversary of a U.S. Treasury Department report that laid out the administration’s deregulatory vision for banks and credit unions. One year on, the biggest winners are small and mid-sized lenders, plus non-bank financial institutions that effectively compete with the largest lenders but under far less scrutiny, says Karen Petrou, analyst at Federal Financial Analytics. The most significant change was a bill signed by the president that raised the threshold at which banks must submit to annual Federal Reserve stress testing, to $250 billion of total assets from $50 billion. This was a major change in the Dodd-Frank regime that will be a boon to around two dozen mid-sized banks and clears the way for more mergers and acquisitions among smaller banks.