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Fear of $10 Billion

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Abstract

Ten billion has become a big number in banking since the Dodd-Frank Act of 2010. When banks’ assets exceed that threshold, they face considerably heightened supervision and regulation, including exams by the Consumer Financial Protection Bureau, caps on interchange fees, and annual stress tests. There are plenty of anecdotes about banks avoiding the $10 billion threshold or waiting to cross with a big merger, but we’ve seen no systematic evidence of this avoidance behavior. We provide some supporting evidence below and then discuss the implications for size-based bank regulation—where compliance costs ratchet up with size—more generally.

Suggested Citation

  • Donald P. Morgan & Bryan Yang, 2016. "Fear of $10 Billion," Liberty Street Economics 20161003, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:87156
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    More about this item

    Keywords

    bank regulation; unintended consequences; Too-big-to-fail;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services

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