- Today's bipartisan deal raises the threshold at which banks are subject to boosted regulation to $250B in assets from the current $50B. The way things stand now, it would reduce the number of banks subject to the Fed's annual stress test to just 12 from 38.
- Should this agreement become law, players like Zions Bancorp (NASDAQ:ZION), Citizens Financial (NYSE:CFG), BB&T (NYSE:BBT) and SunTrust (NYSE:STI) - all of whom have failed a previous stress test - would no longer need to take the exam.
- The deal is a setback for regional lenders above $250B in assets like U.S. Bancorp (NYSE:USB) and PNC Financial (NYSE:PNC), both of whom preferred doing away with asset thresholds in favor of something more subjective. "$50 billion? $250 billion? Why is that number any better than another," asked U.S. Bancorp CEO Terry Dolan a couple of weeks back.
- Will those backs no longer subject to higher regulation be able to cut costs? Not so fast, says Evercore's John Pancari, noting lenders who spent plenty building robust risk assessment platforms aren't likely to go back to their old ways.
- More interesting might be the M&A and growth possibilities. How many banks have purposely held back on loan growth or passed on acquisitions so as not to bust through the $50B level?
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- Now read: Using Market-Maker Forecasts To Pick Best Exchange Traded Fund ETFs
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