The Federal Reserve is developing a plan that could raise asset thresholds triggering stricter oversight of large U.S. banks, potentially giving several major regional lenders greater room to grow without immediately facing additional regulatory requirements.
Four people familiar with the matter told Reuters that the Fed is considering reindexing supervisory thresholds to account for inflation and economic growth. A formal proposal could emerge later this year.
Current rules escalate oversight when banks reach $100 billion, $250 billion and $700 billion in assets.
Under the potential changes, the highest threshold could move toward roughly $960 billion, while some additional requirements currently associated with the $100 billion threshold could move closer to $150 billion.
The implications could be significant for large regional banks approaching existing supervisory thresholds.
Smaller regional lenders could also gain additional capacity to expand before triggering some of the compliance infrastructure associated with the current regulatory categories.
The changes could influence bank consolidation by reducing regulatory barriers that can discourage institutions from growing beyond specific asset levels.
Not every requirement can be changed administratively. Some supervisory rules are established by federal law and would require congressional action.
A Federal Reserve spokesperson declined to comment on the reported plan. The changes therefore remain under consideration and have not been formally proposed or adopted.
Markets will watch for an official Fed proposal, the precise thresholds selected and whether the changes ultimately accelerate merger activity among regional and mid-sized banks.
