FSR Releases Study: ‘Bank Size vs. Systemic Importance’

FSR and the Aite Group released a study that finds that the Financial Stability Oversight Council (FSOC) SIFI designation process based on a $50 billion asset size threshold is arbitrary, ineffective and fails to accurately identify banks that are economically risky. Aite Group examined financial data from SEC filings of U.S. financial institutions ranging from $20 billion to $2.5 trillion to compare systemic importance. The data shows there is negligible correlation between a bank’s asset size and its level of systemic importance. The findings back the longtime argument of both FSR and the financial services industry that asset size isn’t an effective or accurate way to measure systemic risk.