Postcrisis regime places financial groups of different sizes under the same regulatory umbrella
Salt Lake City is a long way from Wall Street. But one bank from that city is finding it difficult to convince regulators of that.
Zions Bancorp., one of the nation’s largest regional lenders, has been beset by problems in the last two rounds of “stress tests,” administered by the Federal Reserve to measure whether banks can weather another financial crisis. Zions, which operates in 11 primarily Western states, failed a key portion of the test in 2014 and barely squeaked through this year.
Despite its reputation as a bread-and-butter lender, Zions has had more trouble navigating the stress tests than many of the mammoth Wall Street firms.
Zions’s struggles are a stark example of an issue that is exercising banks large and small: The tougher postcrisis regime has placed financial groups of different sizes and characteristics under the same regulatory umbrella. The problem is particularly galling for banks like Zions, which barely clear the threshold to be included in the stress tests.