FDIC’s Hoenig Urges Congress to Ditch Asset Thresholds

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.”