Keating: Dodd-Frank SIFI Threshold Is Set Too Low

The Dodd-Frank Act’s asset threshold for systemically important financial institutions is set too low and should be replaced by a more tailored approach, ABA President and CEO Frank Keating said in a letter to the editor published Sunday in the Washington Post.

“The current $50 billion threshold captures a lot of banks that, were they to fail, would come nowhere near to bringing down the financial system,” he wrote. “Having to regulate them as if they would dilutes regulators’ attention to true systemic risks and threats.”

Keating added that Congress should go beyond “arbitrary numerical thresholds” and give regulators the power to tailor supervision according to business model, activities, risk profile and other more meaningful factors.