The U.S. Federal Reserve is preparing a proposal to raise the asset thresholds that trigger stricter regulatory oversight for regional and large banks, potentially releasing it by the end of 2026. The plan aims to raise the highest threshold to $1 trillion and adjust lower tiers to account for inflation and economic growth since 2019. While proponents argue this will reduce compliance costs and spur midsize bank mergers, critics warn it could increase systemic risks and weaken competition.
Federal Reserve proposal to raise thresholds
- ▪The Federal Reserve plans to raise the highest bank oversight threshold to about $1 trillion and move some requirements that currently begin at $100 billion closer to $150 billion.
- ▪The Federal Reserve's proposed threshold adjustments would cover requirements for bank stress testing, liquidity, capital, and regulatory reporting.
- ▪Federal Reserve Vice Chair for Supervision Michelle Bowman stated in January 2026 that the regulator would consider revising the bank oversight thresholds, potentially using nominal gross domestic product as a benchmark.
- ▪The U.S. Federal Reserve is preparing a proposal, potentially to be released by the end of 2026, to raise the asset thresholds that trigger stricter regulatory oversight for banks.
Potential impact on bank growth and mergers
- ▪The Federal Reserve's proposed changes to raise asset thresholds to about $1 trillion could encourage mergers among midsize and regional banks that have previously avoided acquisitions to prevent crossing into stricter regulatory categories
- ▪A banking industry executive stated that raising the $700 billion threshold would help larger lenders compete more effectively with the four largest U.S. retail banks.
- ▪James Stevens, a partner at law firm Troutman Pepper Locke, stated that raising the Federal Reserve's asset thresholds would allow bank boards to assess mergers on their merits rather than focusing solely on regulatory limits
- ▪Raising the Federal Reserve's bank oversight thresholds could give lenders such as US Bancorp, Capital One, PNC Financial, Truist, Western Alliance, and Zions more room to grow without facing the strictest regulatory requirements
Arguments for easing regulatory thresholds
- ▪Officials in the administration of U.S. President Donald Trump believe that current bank oversight rules are holding back lending and economic growth.
- ▪Proponents argue that raising the bank oversight thresholds is necessary to account for inflation and economic growth since the current regulatory tiers were established in 2019.
- ▪A representative for US Bancorp stated that adopting the Federal Reserve's proposed bank oversight rules that account for economic growth would benefit consumers and small businesses by expanding lending and strengthening competition
Opposition to regulatory easing and consolidation
- ▪Critics of bank consolidation argue that it weakens competition, limits consumer choice, and increases systemic risks to the financial system.
- ▪Democratic lawmakers argue that Dodd-Frank Act bank oversight rules were already sufficiently eased in 2018 and that the Federal Reserve's asset thresholds provide a straightforward way to determine regulatory requirements
Current regulatory tiers and compliance costs
- ▪Under regulatory tiers established in 2019, banks with assets of $100 billion or more face stricter requirements, with additional oversight tiers applying at $250 billion and $700 billion.
- ▪Crossing the $100 billion asset threshold typically requires banks to spend tens of millions of dollars annually on compliance specialists, risk management systems, stress testing, and reporting infrastructure.
Recent midsize bank mergers
- ▪In 2025, Fifth Third announced a $10.9 billion acquisition of Comerica, representing one of seven mergers among midsize and regional banks.
- ▪According to S&P Global Market Intelligence, banks with assets between $50 billion and $700 billion announced 33 acquisitions of banks and savings institutions over the past decade, including seven in 2025.
History of Dodd-frank threshold adjustments
- ▪The 2018 legislation passed by Congress easing the Dodd-Frank Act retained stricter prudential standards for banking institutions with assets exceeding $250 billion
- ▪The 2010 Dodd-Frank Act established bank oversight thresholds, which Congress eased in 2018, retaining statutory stress testing but granting the Federal Reserve authority to set additional capital, liquidity, and reporting rules for banks with over $100 billion in assets.
Debatable claims
- ▪The Federal Reserve should raise the asset thresholds for stricter bank oversight
- ▪Fixed asset thresholds are an ineffective way to determine bank regulatory requirements
- ▪Consolidation among midsize and regional banks does more harm than good
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