As regulatory reform bills advance, Congress should replace asset thresholds with supervisory requirements tailored to the activities of banks, FDIC Vice Chairman Thomas Hoenig wrote in an American Banker op-ed today.
“As I’ve long advocated, regulation should focus on the business model rather than arbitrary asset-size thresholds, and the distinct differences between commercial and universal banks [Hoenig’s term for global systemically important banks], as illustrated by their financial footprint, call for such an approach,” he wrote. “A principal advantage of this activities-based approach is that it would eliminate the need for the asset-size thresholds. . . . Even if the current thresholds are raised as part of the regulatory reform effort, they will quickly become obsolete and this trend will continue.”