By Tyler Mondres
ABA Viewpoint
The House’s bipartisan passage of the Main Street Capital Access Act marks an important shift in the debate over bank regulation. By establishing a process to update and index numerous regulatory thresholds, lawmakers recognized that effective tailoring cannot depend on dollar figures that remain frozen while the economy and banking system continue to grow.
Tyler Mondres is VP for prudential regulation at ABA.
For years, bank regulation has relied on asset thresholds to distinguish between institutions based on size, complexity, and risk. Those thresholds determine which rules apply, when additional supervisory requirements kick in, and how regulators tailor oversight across the banking system. ABA has long argued that asset thresholds are a poor measure of risk. These crude tools are even worse when they are left static.
A $10 billion bank in 2010 is not the same as a $10 billion bank in 2026. Inflation, economic growth and balance sheet expansion gradually erode the real value of fixed dollar thresholds. Over time, more institutions become subject to requirements that were intended for much larger firms, not because their risk profiles have changed, but because the thresholds have not.
This regulatory drift creates three problems. First, it forces banks with limited complexity or risk profiles to absorb compliance and reporting costs intended for much larger and complex entities. Second, it can discourage growth by creating incentives for banks to manage their balance sheets around outdated thresholds rather than community needs, potentially limiting lending and other services. Third, it spreads supervisory and compliance resources thin across a broader range of institutions, making it harder for regulators to focus attention where it is needed most.
ABA has repeatedly highlighted this problem and proposed a simple solution: adjust thresholds for past inaction and index them prospectively to objective economic measures. Doing so would preserve the original policy judgments behind those thresholds while preventing regulatory requirements from expanding to cover more institutions simply because the economy has grown.
Indexing has moved from theory to practice
The first significant development on this issue came in November 2025, when the FDIC issued a final rule to adjust and index a number of key asset thresholds affecting community banks, including their audit and internal control thresholds. The FDIC action represented an important acknowledgment of a basic principle: when policymakers establish a threshold, they should take steps to preserve the threshold’s intended meaning over time.
Since then, the federal banking agencies have incorporated that principle into several major rulemakings:
- In March 2026, the banking agencies released proposals addressing Basel III capital requirements, the standardized approach, and the GSIB surcharge framework. Each proposal incorporated some form of indexing for key dollar-based thresholds. Notably, the Federal Reserve proposed indexing the GSIB surcharge Method 2 coefficient to nominal GDP. As Federal Reserve Governor Christopher Waller explained, “it is critical to index bank size-related regulatory thresholds . . . to nominal GDP” because “[w]hat matters for assessing the systemic importance of a bank is its nominal size relative to the nominal size of the U.S. economy.”
- The FDIC has similarly incorporated indexing into other significant rulemakings beyond capital. In June 2026, the agency proposed revising its insured depository institution resolution planning requirements by raising the asset threshold for covered institutions from $50 billion to $100 billion and indexing it for inflation going forward.
- At the same meeting, the FDIC proposed updating the deposit insurance assessment framework by increasing the threshold separating “small” and “large” institutions from $10 billion to $30 billion and providing for future inflation-based adjustments every four years.
Taken together, these actions show that indexing is no longer confined to a single agency or regulatory regime. It is becoming a recurring feature of bank regulatory policy.
Legislative momentum continues to build
As regulators have increasingly embraced indexing, Congress has begun examining many of the same issues. Members of the House Financial Services Committee have called on regulators to revisit enhanced prudential standards thresholds, while lawmakers on both sides of the aisle have raised questions about whether current thresholds continue to reflect the original policy intent that justified their adoption.
During a recent Senate Banking Committee hearing, Sen. Katie Britt (R-Ala.) highlighted the practical consequences of relying on unchanged thresholds while banks continue to grow alongside the broader economy. Her comments reflected a growing recognition that tailoring frameworks should adapt over time rather than remain fixed indefinitely.
The strongest evidence that indexing has entered the mainstream may be Congress’s recent consideration of the Main Street Capital Access Act, which passed the House with strong bipartisan support.
The legislation does not automatically raise every threshold or prescribe a single indexing methodology. Instead, it creates a prospective process for regulators to study, update, and maintain thresholds. The breadth of the legislative package demonstrates how indexing has evolved from a discussion about a handful of thresholds into a broader framework for maintaining regulatory tailoring over time
Where we go from here
The progress of the past year has been substantial. The FDIC has adopted a permanent indexing framework and the banking agencies have incorporated indexing into other major regulatory proposals; Congress is actively considering legislation that would index numerous banking thresholds; and policymakers increasingly recognize the connection between indexing and effective tailoring. But the work is far from complete.
First, regulators should conduct a comprehensive review of material asset-based thresholds throughout the banking rulebook. Similar institutions should not face dramatically different treatment simply because some thresholds are indexed, while others remain frozen in time.
Second, the agencies should revisit major tailoring thresholds that have not been updated since their adoption. The original policy intent behind those thresholds may remain sound, but preserving those judgments requires keeping the thresholds aligned with economic reality.
Third, policymakers should continue refining the methodology used for indexing. As ABA has previously argued, not every threshold serves the same purpose. Indexing to nominal GDP would help ensure that thresholds remain proportionate to the size of the broader economy. Unlike inflation, which measures only price levels, nominal GDP captures the aggregate value of goods and services produced, aligning more closely with the critical role of the financial services sector in driving economic growth.
Finally, indexing should become a standard part of all rulemakings. When agencies establish a new threshold, they should simultaneously determine how that threshold will be maintained over time.
From a debate to a framework
Only a few years ago, indexing was largely absent from discussions about bank regulation. Today, it is shaping major regulatory and legislative proposals. The idea that effective tailoring requires thresholds that retain their meaning over time is firmly established in the policy conversation.
The task ahead is to ensure that indexing becomes a permanent feature of the regulatory framework.
ABA Viewpoint is the source for analysis, commentary and perspective from the American Bankers Association on the policy issues shaping banking today and into the future. Click here to view all posts in this series.
