WASHINGTON – Thomas Hoenig, the Vice Chairman of the Federal Deposit Insurance Corporation, today proposed basing bank regulation on activity and complexity, not just size, saying in a speech that “Defining an approach to regulatory relief by complexity and activity, not strictly size, would provide a beneficial and prudent trade-off for firms protected by the safety net by acknowledging that banks that engage in traditional banking activities are sufficiently supervised and by appropriately bringing riskier activities under greater scrutiny.”

In response, William Moore, the Executive Director of the Regional Bank Coalition issued the following statement:

“We welcome Vice Chairman’s Hoenig support for reforming bank regulation to take into account not just size, but risk and complexity. While there are elements of his proposal to which we would suggest modification, it is clear there is a growing consensus that the arbitrary $50 billion threshold does not adequately account for risk and creates unnecessary regulatory burdens that hamper economic growth. There is a better path forward for banking regulation.

“Since Congress established the $50 billion threshold for determining systemic risk, regulators at the Financial Stability Board and the Basel Committee have developed more precise methods that take into account not just size, but also complexity, global activity, and other issues. Under those methods, regional banks pose none of the systemic threats presented by the large Wall Street banks, as a recent study from the Treasury Department’s Office of Financial Research has demonstrated.

“Reforming the law to allow regulators to take into account the actual risk presented by regional banks would remove costly, unnecessary regulatory burdens and allow our members to increase their economic activity in communities across the nation. We welcome Vice Chairman Hoenig’s voice to the debate and further action by Congress.”

About the Regional Bank Coalition: The Regional Bank Coalition is a group of regional banks that support regulation based on risk and business model to ensure safety and soundness. For more information, visit www.regionalbanks.org or follow on Twitter @rgnlbanks.