Fed to ease regional bank rules in wake of Crapo bill, but not all the way

25 May 2018 7:31am
While a bill signed by President Trump on Thursday eases Dodd-Frank regulation of small and mid-size banks, it leaves enough leeway for the US Federal Reserve to keep at least some controls in place for regional banks, and Fed Chairman Jerome Powell has indicated he plans to hold their feet to the fire through stress testing.

Powell, a Republican who heads the three-member Fed, told lawmakers in March that he would take advantage of the discretion granted in the bill to propose rules modifying oversight of banks with $100 billion-$250 billion in assets.

Under the new law, these banks — including BB&T, Suntrust, Ally Financial, Fifth Third Bancorp, Keycorp, and M&T — will no longer be subject to heightened capital, resolution plan and credit exposure report standards, among others, provided under the 2010 Dodd Frank Act.

And instead of annual supervisory stress tests, they will only have to submit to "periodic" tests of how well their capital could absorb economic shocks. The new law gives the Fed 18 months, if it so chooses, to frame the rigor and frequency of these tests.