Trades ask regulators to revisit asset thresholds

Over 50 trade groups sent a joint letter to regulators urging them to raise bank regulatory thresholds, arguing inflation and growth have distorted many of the regulatory triggers for enhanced prudential standards.

In the letter — signed by 53 banking trade associations, including the American Bankers Association — petitioned the heads of the Federal Deposit Insurance Corp. Office of the Comptroller of the Currency and the Federal Reserve’s bank supervision offices to rethink asset thresholds that subject banks to various levels of regulatory requirements. 

“Thresholds that once reflected meaningful distinctions in size, complexity, or risk now capture institutions that were never intended to be subject to more burdensome regulatory requirements,” the groups wrote. “The practical consequence of this failure to index is a steady expansion of regulatory reach — not through legislative or regulatory deliberation, but by default.”

The groups argue that leaving supervisory asset thresholds in place fails to account for impacts like inflation, leaving thresholds static for years and creating a misalignment between the growing banking sector and supervisory requirements firms face.

The groups also cited broad political support for revisiting asset thresholds. House Financial Services Committee Chair French Hill floated the idea of lifting the $10 billion supervisory threshold to $25 billion, while Financial Institutions Subcommittee Chair Andy Barr, R-Ky., has introduced legislation to raise it to $50 billion. Federal Reserve Vice Chair for Supervision Michelle Bowman and FDIC Acting Chair Travis Hill have also made comments in support of retailoring asset thresholds. 

“Inflation affects every corner of the American economy, from the price of consumer goods to the purchasing power of deposits,” they wrote, “Banks with limited complexity or risk profiles may be forced to shoulder costs and reporting burdens designed for much larger peers … in some cases, this distortion discourages organic growth and instead encourages consolidation as the only viable means to absorb new regulatory burdens.”

In April, Travis Hill called for raising the asset thresholds, saying inflation has made the current benchmarks outdated, noting that a $100 billion bank — the current marker for a “large” institution — was the equivalent of $124 billion in dollars in 2025. 

In May, inflation grew by 2.3% on an annual basis, according to the Personal Consumption Expenditures report released by the Bureau of Economic Analysis on Friday. That’s above the Fed’s target rate of 2% and an increase from the 2.2% seen in April. Core PCE was up even more, at 2.7% in May — marking a setback for the Fed’s inflationary target.

The groups also argue the current thresholds make it more difficult for bank supervisors at the agencies to properly focus on core banking risks. They say a growing number of banks are covered within the current “static” thresholds, dispersing the amount of time and energy examiners can dedicate to the most risky institutions. 

“We respectfully urge the regulatory agencies to continue evaluating opportunities to use existing authority to index supervisory asset thresholds. We also encourage the agencies to work with Congress to identify where statutory changes are required to implement indexing so that standards do not unintentionally drift over time.”