Winston-Salem’s BB&T Corp. is one of 10 regional lenders that have formed a coalition to argue they should not face the same post-financial crisis regulations imposed on the biggest U.S. banks.
The Regional Bank Coalition, based in Washington, D.C., announced its launch on Monday. BB&T, the third-largest bank by deposits in the Charlotte metropolitan area, is the only Carolinas-based lender in the group.
The coalition says it objects to Dodd-Frank Act requirements that apply to bank holding companies like theirs with at least $50 billion in assets. One requirement for such banks is that they participate in the Federal Reserve’s annual “stress tests.” Another is that they write “living wills,” plans for rapidly dismantling themselves in times of financial distress.
The coalition says $50 billion is an arbitrary threshold. Instead, bank regulations should reflect the amount of risk a particular lender poses to the financial system, the coalition says. Despite their larger size, regional banks have a business model that closely resembles that of community banks, the coalition says.
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“Regional banks didn’t cause the systemic financial crisis of 2008, and they don’t carry the kind of risk associated with large Wall Street banks,” William Moore, the coalition’s executive director, said in a statement. “They don’t look like the big money center banks, they don’t act like them, and they shouldn’t be regulated like them.”
In a speech last year, Federal Reserve Gov. Daniel Tarullo said more than 80 U.S. banks have at least $10 billion in assets. If some of those became distressed or failed at the same time, it could harm access to credit in “significant regions or sectors of the economy,” he said. But of those banks, only a “small fraction” would cause a “sizable negative” impact to the financial system if they went under stress or failed, he said.
Since the financial crisis, banks have complained about the high costs of complying with post-crisis regulations. Supporters of the regulations say they better protect the U.S. and world economies from another large-scale downturn.
The other members of the coalition are American Express, BancWest Corp., BBVA Compass Bancshares, BMO Financial Corp., Capital One Financial Corp., Fifth Third Bancorp, Huntington Bancshares, Regions Financial Corp. and SunTrust Banks.