House Republicans Ask Regulators to Reassess Prudential Standards

House Republicans urged federal banking regulators to reassess how Enhanced Prudential Standards ("EPS") are applied to mid-sized banking organizations. 

In a letter to Federal Reserve Vice Chair Michelle Bowman, Comptroller Jonathan Gould, and FDIC Acting Chair Travis Hill, the lawmakers argued that the existing categorical structure imposes a uniform supervisory regime that treats mid-sized banks much like the largest global institutions. They warned that banks with assets between $100 billion and $250 billion, for which application of EPS is discretionary, are nevertheless subject to stringent requirements designed for larger firms. The lawmakers contended that these categories group together banks with vastly different business models, risk profiles, and levels of complexity, undermining the statutory requirement to tailor enhanced prudential obligations.

The lawmakers also highlighted concerns about "regulatory threshold bracket creep," noting that static EPS thresholds set in 2019 have not been adjusted for inflation or economic growth and therefore capture an increasing number of banks over time. They urged the agencies to consider indexing thresholds to measures such as nominal GDP, total banking-system assets, or relevant price indices to ensure that EPS applies proportionately. In light of these concerns, the lawmakers requested information about how the agencies intend to reassess category designations, evaluate risk alignment, and consider modifications—including subdividing or eliminating categories—to better calibrate regulatory requirements.