The Federal Reserve's plan to expand oversight of lenders after the collapse of SVB Financial Group and Signature Bank is a move in the right direction. While it will likely be a laborious process, there is also an easy fix.
The Fed is considering tougher rules for midsize banks after last week’s events, the Wall Street Journal reported. They could target lenders with between $100 billion to $250 billion in assets. In 2018, lawmakers rolled back some of the restrictions imposed after the global financial crisis. They raised a threshold so that those with less than $250 billion in assets — instead of $50 billion previously — could escape the toughest regulatory scrutiny. SVB, the 16th largest lender with about $210 billion assets, was a big beneficiary.
Extending the government’s radar will be time-consuming, however. Instead of monitoring just a dozen big banks, such as JPMorgan Chase & Co. and Bank of America Corp., the regulators will keep their eyes on more than 30. This perhaps explains why, in the past, officials had talked openly about spending less time policing the balance sheet of smaller institutions.
