The Federal Reserve is considering raising the asset thresholds that determine how closely large U.S. banks are supervised, a shift that could give regional lenders more room to grow without triggering tougher stress-testing, liquidity, capital, and reporting requirements. The central bank is working on changes that would account for inflation and economic growth in how those thresholds are set, according to four people with knowledge of the matter.
As reported by India's News.Net, the Fed could propose the threshold changes later this year, per three people familiar with the matter. Currently, U.S. bank regulatory requirements become more stringent once a bank's assets hit $100 billion, with additional thresholds at $250 billion and $700 billion. The Fed is reportedly weighing moving the $100 billion mark to about $150 billion and pushing the top threshold closer to $1 trillion — a shift that, under nominal GDP reindexing, could land around $960 billion.
Which Banks Stand to Gain
U.S. Bancorp, Capital One, PNC Financial, and Truist are among the lenders closest to the existing $700 billion threshold, per the same report. Western Alliance and Zions could expand beyond $100 billion in assets without triggering all the requirements currently applied at that level, while Pinnacle Financial Partners could shed some obligations with assets between $100 billion and $150 billion.
A Federal Reserve spokesperson declined to comment on the matter. Fed Vice Chair for Supervision Michelle Bowman has said the central bank would consider reindexing supervisory thresholds, according to India's News.Net's reporting — a position she also outlined publicly at a California Bankers Association seminar in January, where she proposed indexing supervisory asset thresholds to nominal GDP and questioned whether single-metric asset cutoffs still effectively measure institutional risk, according to the Federal Reserve Board.
A U.S. Bancorp spokesperson said the U.S. economy has grown significantly and argued that updated rules should increase lending capacity and competition. Other banks either declined to comment or did not respond to requests for comment, per the original report.
A Push Building for Months
The potential rule change would not emerge in isolation. In June, the Bank Policy Institute and the American Bankers Association jointly urged the Fed to adjust its 2019 tailoring rule thresholds, arguing that seven years of unadjusted economic growth had disconnected the rules from actual bank risk profiles, according to the Bank Policy Institute. That framework, established in October 2019, sorts large banking organizations into four risk categories, with Category IV covering banks holding $100 billion to $250 billion in assets and Category III covering those between $250 billion and $700 billion.
Congress has been moving in parallel. In December 2025, the House Financial Services Committee approved the Tailoring and Indexing Enhanced Regulations Act, sponsored by Representative Andy Barr, which would reset Category II, III, and IV thresholds and permanently index future regulatory limits to nominal GDP. The bill reflects a broader congressional effort to keep banks from crossing into stricter supervisory tiers solely because of inflation and economic growth, according to the House Committee on Financial Services.
Some of the underlying limits trace back to the Economic Growth, Regulatory Relief, and Consumer Protection Act, signed into law in May 2018, which raised the statutory mandatory threshold for enhanced prudential standards from $50 billion to $250 billion while giving the Fed discretion to apply tailored standards between $100 billion and $150 billion — sorry, between $100 billion and $250 billion — as detailed by the Legal Information Institute at Cornell Law School. Some supervisory requirements remain mandated by law and can only be changed by Congress, while the Fed retains discretion over additional capital planning, liquidity, and reporting requirements, per India's News.Net.
Mergers, Cost Savings and a Cautionary Tale
Analysts say the proposed changes could encourage consolidation among mid-sized lenders. Truist analysts wrote that revised thresholds can reduce the downsides of growth and change the costs and benefits of acquisitions, according to the original reporting. Banks with $50 billion to $700 billion in assets have announced 33 bank and thrift acquisitions over the past decade, including seven in 2025 alone.
Attorney James Stevens said the changes would unlock mergers and acquisitions among mid-cap and regional banks, allowing bank boards to assess deals on their merits rather than regulatory math, per the report. Fifth Third's $10.9 billion acquisition of Comerica, completed in February, illustrates both the appeal and the cost of such deals: after closing, Fifth Third eliminated 502 jobs at Comerica's Farmington Hills campus in Michigan as part of an effort to reach $360 million in net cost savings this year, even as it pledged to keep the facility running as a regional hub, Hoodline previously reported.
Critics of consolidation caution that bank mergers can reduce competition and services while increasing systemic risks. Bank oversight thresholds were established in 2019 and, according to banks, have not kept pace with economic growth — a gap that can discourage expansion even as it draws pushback from those wary of loosening oversight on regional lenders.
Broader Regulatory Overhaul Underway
The threshold review is not happening in a vacuum. A coalition led by the Bank Policy Institute and American Bankers Association sued the Fed in December 2024 over opaque stress-testing models, alleging violations of the Administrative Procedure Act in the U.S. District Court for the Southern District of Ohio; that litigation has led to joint court stays through late 2025 while the Fed prepares public notice-and-comment rulemaking for its stress test framework.
Bowman is also overhauling capital rules and other aspects of the Fed's supervisory regime more broadly. In speeches this year, she previewed additional updates, including indexing Global Systemically Important Bank surcharge coefficients to economic growth and averaging two years of stress test results to smooth out capital buffer volatility, according to the Bank for International Settlements. Regulators have already used this kind of automatic indexing elsewhere: on January 1, the Fed and FDIC raised the Community Reinvestment Act small bank asset threshold to $1.649 billion, applying a 2.51 percent inflation adjustment, Hoodline reported at the time. Research from the Federal Reserve Bank of Cleveland published in April found that large banks had historically bunched their asset growth just below the $100 billion and $250 billion thresholds after the 2019 tailoring rule took effect, confirming that crossing each tier imposes distinct compliance costs — though the researchers noted the friction did not prevent bank growth entirely.
