Senate Hearing on How to Identify 'Systemically Important' Banks

• •Current law (Dodd-Frank) automatically labels any bank with $50 billion or more in assets as 'systemically important'.
• •There is currently no clear legal process for a bank to exit the 'systemically important' designation once it crosses the $50 billion threshold.
• •Chairman Shelby argues the $50 billion threshold is arbitrary and captures banks that do not pose a risk of systemic contagion.
• •The Federal Reserve recently finalized a capital surcharge rule for the largest banks that uses a multi-factor framework rather than a single asset-size threshold.
• •Federal Reserve Chair Janet Yellen has expressed support for giving regulators more flexibility to use multiple criteria to determine systemic importance.
• •Critics argue that applying strict systemic risk regulations to smaller banks unnecessarily consumes regulatory resources and impacts lending to small businesses.

The hearing addresses whether regional and community-focused banks should continue to face the same strict regulatory requirements as the nation's largest financial institutions, which impacts the operational costs and lending capacity of those banks.

Patterns POLISCOPE noticed across the record. These are observations to investigate, not conclusions.