Effects of Fixed Nominal Thresholds for Enhanced Supervision

Posted: 23 Jul 2018 Last revised: 25 Jun 2020

See all articles by David Hou

David Hou

Federal Reserve Banks - Federal Reserve Bank of New York

Missaka Warusawitharana

Board of Governors of the Federal Reserve System

Date Written: 2018-07-19

Abstract

Following the financial crisis, the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and the implementation of Basel III significantly changed the regulatory landscape in the U.S. This note discusses how the use of such fixed nominal thresholds impacts the extent of enhanced prudential supervision. Section 1 presents the various thresholds that are in place as of May 15, 2018. Section 2 analyzes the effect of these thresholds on the number and total assets of the affected banks, and examines whether the thresholds have caused any bunching of banks. Section 3 discusses possible changes that may help address some of these effects.

Suggested Citation

Hou, David and Warusawitharana, Missaka, Effects of Fixed Nominal Thresholds for Enhanced Supervision (2018-07-19). FEDS Notes No. 2018-07-19, Available at SSRN: https://ssrn.com/abstract=3217789 or http://dx.doi.org/10.17016/2380-7172.2183

David Hou (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Missaka Warusawitharana

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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