President Biden’s administration is moving to tighten the rules for mid-sized U.S. banks with assets between 100 billion and 250 billion dollars. The initiative, reported by The Wall Street Journal and corroborated by government and industry insiders, signals a shift toward stricter capital and liquidity standards for these institutions. The proposed changes would be designed to strengthen the resilience of this critical segment of the banking system as the economy navigates a period of uncertainty and shifting monetary policy.
Officials familiar with the plans say the Federal Reserve could raise the required capital buffers and liquidity cushions for these banks, aiming to close gaps that could worsen if a financial shock hits. In addition, the Fed may accelerate the pace of stress testing to ensure banks demonstrate robust defenses against a range of adverse scenarios. The goal is to improve risk awareness and ensure lenders can continue to meet customer needs even during downturns, without relying on taxpayer-funded support.
The White House is also weighing broader changes to deposit insurance coverage to bolster public confidence. A formal review of this policy area is expected to be issued by the Federal Deposit Insurance Corporation within the near term, outlining potential steps to extend protection or adjust coverage levels. The discussions come amid a broader debate about whether the federal shield should adapt to different sizes of banks and evolving business models while safeguarding the financial system’s stability.
Some aides to President Biden have indicated caution about proceeding too quickly, arguing that sweeping moves could invite political backlash or accusations of favoring certain lenders. As a result, the administration appears to be pursuing a calibrated path that balances safety with maintaining competitive fairness in the financial sector.
The FDIC’s earlier commentary emphasized the fragility exposed by the collapse of Silicon Valley Bank, a major U.S. lender by asset size that ranked among the larger banks to fail in recent history. The incident underscored the risk that even institutions with strong growth profiles can encounter serious liquidity pressures in a stressed environment. The episode has intensified the focus on governance, risk controls, and the reliability of liquidity planning across the system.
Meanwhile, New York State regulators acted to shut down Signature Bank on grounds of systemic risk, highlighting the ongoing vigilance by state authorities to intervene when necessary to protect the broader banking network. The case has added urgency to federal and state discussions about how to modernize oversight, align incentives, and ensure that depositors have confidence while taxpayers are shielded from potential losses. It also reinforces the argument for stronger, more transparent stress-testing practices and clearer capital standards that apply across the spectrum of U.S. banks.