Fed Plans to Raise Bank Oversight Thresholds in 2024

The U.S. Federal Reserve plans to raise bank oversight thresholds in 2024, adjusting post-crisis rules that lenders argue no longer reflect inflation and economic growth.

The proposal aims to lift asset thresholds for stricter oversight, moving the $700 billion trigger closer to $1 trillion and the $100 billion threshold to about $150 billion. Banks such as U.S. Bancorp, Capital One, PNC Financial, Truist, Western Alliance, and Zions would gain expansion room and potentially face fewer compliance and capital requirements under the changes.

Bank executives argue that the current rules impose stricter requirements when a bank reaches $100 billion in assets, with further step-ups at $250 billion and $700 billion. They claim these levels have not kept pace with the wider economy, forcing lenders to take on compliance, risk management, and reporting costs.

The potential effects of the proposal could be significant, as it could accelerate regional and mid-cap bank mergers, which have been limited to just seven deals last year among banks in the $50 billion to $700 billion range. Critics of consolidation argue that fewer banks can reduce competition and services for consumers while increasing systemic risk.