RE: ..19 Mar 2023 09:17
A 2010 law signed by then-President Barack Obama, widely known as Dodd-Frank, had created stricter regulations for banks with at least $50 billion in assets. These banks, which were deemed “systemically important” to the financial system, were required to undergo an annual Federal Reserve “stress test,” to maintain certain levels of capital (to be able to absorb losses) and liquidity (to be able to quickly meet cash obligations), and to file a “living will” plan for their quick and orderly dissolution if they were to fail.
The 2018 rollback got rid of the $50 billion threshold, which many banks had argued was needlessly encumbering them. Instead, among many other changes, the rollback law made the enhanced regulations standard only for banks with at least $250 billion in assets – only about a dozen banks at the time.
The rollback law did give the Federal Reserve the right to choose to apply the regulations to particular banks with at least $100 billion in assets, and it said that banks that met that $100 billion threshold would still face “periodic” Fed stress tests. Still, the change from a standard $50 billion threshold to a standard $250 billion threshold was widely described as a major victory for banks with assets below $250 billion.
The list included SVB, whose chief executive officer, Greg Becker, had urged Congress to raise the threshold.