The Senate Banking Committee reached a bi-partisan agreement to increase the SIFI threshold for BHCs from $50 billion to $250 billion.
The final threshold is uncertain, as the agreement could be amended or otherwise changed as it makes its way through the legislative process. Nonetheless, it is highly likely that Congress will pass legislation to raise the SIFI threshold for BHCs.
Proposed SIFI Provision:
Last week, the Senate Banking Committee announced that it had reached a bi-partisan agreement on legislative proposals to reform the financial services regulatory framework. The Committee’s bill, titled the Economic Growth, Regulatory Relief and Consumer Protection Act, includes a wide-range of provisions that broadly address improving consumer protections and access to credit as well as “right-sizing” regulations. (The legislative text is available here.)
Notably, one provision proposes to raise the systemically important financial institution (SIFI) threshold for bank holding companies (BHCs) from $50 billion to $250 billion and exempt these entities from the Federal Reserve Board’s Enhanced Prudential Standards (EPS). In addition:
The bill must still pass votes at the Committee level as well as the full Senate before advancing to additional votes in the House of Representatives and to the President to be signed into law. As such, the provisions could change. However, at least in the Senate, the bipartisan nature of the agreement makes it highly likely that the EPS threshold will be raised from $50 billion, although the actual number that is agreed upon could be different than the initial $250 billion.
In its recent banking report, the Department of the Treasury recommended amending the SIFI threshold “to more appropriately tailor” these standards to the risk profile of bank holding companies, but did not specify a new threshold amount. The Financial CHOICE Act, the regulatory relief bill that passed the House earlier this year, similarly did not address a specific increase in the threshold.