WASHINGTON — Fed Vice Chairman of Supervision Randal Quarles is expected to testify Tuesday that the central bank plans to move quickly to determine how to regulate banks between $100 billion and $250 billion of assets, and that it may provide further relief for banks over the $250 billion threshold.
Quarles, Federal Deposit Insurance Corp. Chair Jelena McWilliams, Comptroller of the Currency Joseph Otting and National Credit Union Administration Chairman J. Mark McWatters are scheduled to testify to the Senate Banking Committee on the implementation of a regulatory relief package that President Trump signed into law in May.
That legislation, known as S 2155, raised the threshold for banks to be considered systemically important financial institutions and subject to enhanced prudential standards from $50 billion to $250 billion, but gave the Fed the discretion to label banks above $100 billion in assets as systemically important financial institutions, or SIFIs.
While the Fed was given 18 months from the law’s enactment to determine how to regulate banks above $100 billion, Quarles said in his prepared remarks “we expect to move much more quickly than this.”
In developing a framework, Quarles’s prepared remarks indicate that the ”topics covered by such a proposal could include, among other things, capital and liquidity rules, and resolution planning requirements for the less complex and interconnected of these firms.”
The Fed is also reviewing requirements for firms with more than $250 billion in total assets but below the “global systemically important bank” threshold, according to Quarles’s prepared remarks.
“Currently, some aspects of our regulatory regime — liquidity regulation, for example — treat banks with more than $250 billion in assets with the same stringency as G-SIBs,” Quarles said in his prepared remarks. “I can see reason to apply a clear differentiation.”
The comments come as House and Senate Republicans have pushed the Fed to quickly deregulate banks between the $100 billion and $250 billion asset threshold after the passage of S 2155.
Quarles also said in his prepared remarks that implementation of simplified capital standards for certain banks with less than $10 billion of assets is a “high priority” for the Fed and other regulators.
