WASHINGTON—House Financial Services Committee leaders are pressing federal banking regulators to overhaul how large-bank standards are applied, arguing the current framework imposes “one-size-fits-all” requirements that Congress expressly rejected.
In a letter to the Federal Reserve, OCC, and FDIC, committee chairmen and subcommittee leaders say agencies have not used the discretion Congress granted in 2018 to properly tailor enhanced prudential standards (EPS) for banks with $100 billion to $250 billion in assets. Lawmakers contend that many institutions in this range are treated the same as far larger banks despite significant differences in risk, complexity, and business models.
Members specifically question whether banks placed in Categories II, III, and IV are subject to regulatory expectations that don’t match their actual risk profiles. They urge regulators to reconsider how thresholds are applied, whether certain categories should be split or eliminated, and whether EPS applied to mid-sized banks should be scaled back.
The lawmakers also warn that inflation and economic growth have eroded the relevance of existing regulatory thresholds, effectively dragging more banks into stricter regimes over time. They ask regulators to consider indexing thresholds to GDP, total banking-sector assets, or other measures to prevent what they call “regulatory bracket creep.”
The letter emphasizes that Congress expected a tailored system, not one that forces smaller regional banks to shoulder compliance burdens designed for the largest, most complex institutions. Lawmakers say recalibrating the rules would both preserve safety and soundness and strengthen competition in the banking sector.