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Tarullo suggests $100B, rather than $50B as SIFI line

  • There's little chance of any action this year, says Guggenheim's Jaret Seiberg, but Congress could have a look at raising the bar at which banks would be considered "systemically important" to $100B in assets from $50B. The idea comes after Fed Governor Daniel Tarullo - the point man at the central bank over bank regulation - in a speech this week suggested a SIFI designation may not be necessary for those lenders with $50B-$100B in assets.
  • Being branded a SIFI brings far stricter requirements such as drawing up "living wills" and submitting to the Fed's stress test and CCAR. "If the line were redrawn at a higher figure, we might explore simpler methods for promoting macroprudential aims with respect to banks above $10 billion in assets but below the new threshold," says the central planner from the Fed.
  • Making the move to $100B from $50B, says Guggenheim's Seiberg, might be even more likely should Ohio's Sherrod Brown become head of the Senate Banking Committee. A critic of the TBTFs, Brown has also complained about undue burdens being placed on regional lenders such as his home state's Huntington Bancshares (HBAN) and KeyCorp (KEY).
  • ETFs: KRE, KBE, IAT, RKH, QABA, KRU, KBWR, KRS, AIRR
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