A bill to amend the Financial Stability Act of 2010 to provide for tailoring and indexing enhanced regulations.
- Sponsor
- Sen. Britt, Katie Boyd [R-AL]
- Committees
- Banking, Housing, and Urban Affairs Committee (primary)
- Last action
- Sep 22, 2026
Bottom line
The bill aims to reduce the regulatory burden on a broader range of financial institutions by raising the asset thresholds for enhanced prudential standards and by mandating future automatic adjustments to account for economic growth and inflation.
What it actually does
This bill significantly increases various asset thresholds that trigger enhanced financial regulations under several key acts, including the Bank Holding Company Act of 1956, the Economic Growth, Regulatory Relief, and Consumer Protection Act, and the Financial Stability Act of 2010. It also establishes a new framework requiring the Federal Reserve and other financial regulators to periodically adjust these thresholds, and their own rule-based thresholds, based on economic indicators like nominal GDP or the Consumer Price Index.
Proponents argue
Proponents argue that the current regulatory thresholds are outdated due to inflation and economic growth, leading to an over-application of enhanced regulations to institutions that do not pose systemic risks. Raising and indexing these thresholds would appropriately tailor regulations, reduce compliance costs for a broader range of financial institutions, and free up capital for lending and economic activity without compromising financial stability.
Opponents contend
Opponents might argue that raising these thresholds could weaken financial oversight, potentially increasing systemic risk by allowing more large financial institutions to operate with less stringent supervision. They might contend that the current thresholds are necessary to prevent a repeat of past financial crises and that loosening regulations could expose the financial system to greater instability.
The bill is concise and its core changes are clearly articulated, making it accessible for a quick but informed read by those familiar with financial regulation.
Section 1(a)
Immediate Increase of Regulatory Asset Thresholds
This section immediately raises several key asset thresholds that determine which financial institutions are subject to enhanced regulations. For example, the threshold for certain enhanced prudential standards under the Financial Stability Act of 2010 (Dodd-Frank Act) is increased from $250 billion to $370 billion. Similarly, thresholds for assessments and other regulations are increased across various acts, including the Bank Holding Company Act and the Federal Reserve Act.
Supporters argue
Supporters argue that these increases are necessary to account for inflation and economic growth since the original thresholds were set, ensuring that enhanced regulations are applied only to truly systemically important institutions. This prevents smaller, non-systemic institutions from being burdened by disproportionate compliance costs, fostering economic activity.
Critics contend
Critics might argue that these increases could reduce oversight for institutions that, while not the largest, still pose significant risks to the financial system, potentially increasing the likelihood or severity of future financial crises. They contend that the current thresholds are vital safeguards.
Tradeoffs
This provision balances the desire to reduce regulatory burden and compliance costs for financial institutions against the need to maintain robust oversight to prevent systemic financial instability. The tension lies in where to draw the line for 'systemic importance'.
Section 1(b), adding new Section 177 to the Financial Stability Act of 2010
Automatic Indexing of Statutory Regulatory Thresholds
This provision mandates that the Board of Governors of the Federal Reserve System (the Fed) periodically (every 5 years) adjust the specified statutory asset thresholds. These adjustments will be based on an economic indicator (either nominal United States gross domestic product or the Consumer Price Index) selected by the Fed, ensuring that the thresholds keep pace with economic changes and inflation without requiring new legislation. The Fed must also conduct a study on the advantages and disadvantages of each indicator.
Section 1(b), adding new Section 178 to the Financial Stability Act of 2010
Agency Review and Indexing of Rule-Based Thresholds
This section requires the Board of Governors, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (FDIC) to periodically review and modify any asset or quantitative thresholds in their regulations that implement Section 165 of the Financial Stability Act of 2010 (related to enhanced prudential standards) or cross-reference such regulations. These modifications must also be indexed to economic indicators, similar to the statutory thresholds, and agencies are encouraged to establish uniform thresholds where feasible.