Fed eases risk assessments for regional banks

Author: Edward Price | Published: 30 Sep 2016

The Federal Reserve is moving to ease stress tests for regional banks which hold between $50 billion and $250 billion in assets. While market participants in the US have welcomed the move, they note a new degree of added complexity in the Fed’s definition of what constitutes a regional bank. It also looks unlikely that the Fed will raise the threshold for systemically important financial institutions (Sifi) anytime soon. 

Governor Daniel Tarullo revealed the Fed’s proposal on September 26. Speaking at Yale University, he said banks which do not engage in significant international activity or non-bank activity, and that have less than $250 billion in assets, will be exempt from the qualitative part of the Fed’s annual stress tests. Two days later, Fed chair Janet Yellen said at a House Financial Services Committee hearing: "With respect to small and medium-sized banks, we must build on the steps we...