WASHINGTON – The Financial Services Roundtable today released a new study by the Aite Group of Boston, Massachusetts that confirms bank systemic risk should be defined by multi-factor factors in addition to asset size.
In response to the FSR study, William Moore, the Executive Director of the Regional Bank Coalition issued the following statement:
“There is now overwhelming agreement among the academics and industry experts who have examined the issue that the current systemic risk evaluations based on asset size alone are not the best method for evaluating bank risk. Since the adoption of Dodd Frank and the $50 billion threshold for designation as a Significantly Important Financial Institution subject to Enhanced Prudential Standards, regulators have developed more precise and effective methods to determine risk than just asset size alone.
“A bipartisan group in Congress has recognized the development of these better indicators of risk and wants to update our systemic evaluation of banks. This FSR study and many others confirm that systemic importance should be based on multiple factors, including size, inter-connectedness, complexity, global activity, and dominance in certain customer services.
“Regional banks impacted by the $50 billion asset threshold are not based on Wall Street and have a distinctly different focus and business model than the major Wall Street banks. A new, improved regulatory framework will help regional banks to work with their customers in communities across the country and help improve Main Street economies. We hope Congress will act.”
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.