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Some good news for local community bankers arrived May 14 from a somewhat surprising source: federal regulators.
Indeed, a trio of regulatory agencies, in a joint statement, says banks with less than $10 billion in consolidated assets won't be subject to stringent stress tests required under the Dodd-Frank Act. The Federal Deposit Insurance Corp., the Federal Reserve and the Office of the Comptroller of the Currency released the statement.
The stress tests are designed to see how banks would hold up under what regulators call “baseline, adverse and severely adverse” financial scenarios. The idea was to avoid big bank collapses if there is another massive financial meltdown.
But while the focus would be on banks with at least $10 billion in consolidated assets, many community bankers worry that eventually they would be part of the tests. “The agencies understand that these initiatives for larger organizations are raising some questions on the part of community bankers regarding supervisory expectations for stress testing by community banks,” the joint release states.
Of course, the clarification isn't a total free pass. The release also states that “the agencies continue to emphasize that all banking organizations, regardless of size, should have the capacity to analyze the potential impact of adverse outcomes on their financial condition.”
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