GOP may push for increase of ‘too-big-to-fail’ threshold

The number of banks considered too big to fail could soon shrink, The Post has learned.

Republicans, who recently won control of the Senate, are expected to push to increase the $50 billion too-big-to-fail threshold to as high as $250 billion in assets, sources tell The Post.

Such a move would be welcome relief to mid-sized and smaller banks, like KeyCorp. and Fifth Third Bank.

Once deemed systemically important financial institutions, banks are being subjected to heightened regulation — like stress tests.

Also, banks considered too-big-to-fail are subject to liquidity requirements and limits to their exposure to risky assets, one banking insider told The Post.

The $50 billion threshold was established as part of the 2010 Dodd-Frank bank regulation overhaul, and has come under fire from lawmakers and some regulators.

While some Democrats would be in favor of increasing the limit, they are said to be looking at a $100 billion ceiling, sources said.

The higher, $250 billion level would face opposition from Democrats, the person said.

"Maybe the number has to be $100 billion, because the cost of doing business just skyrockets once you go over," Joseph Lynyak III, partner at Dorsey & Whitney in Washington, told The Post.

"Fifty billion is probably not too big to fail," he added.

The change would have at least one fan in the central bank.

Earlier this year, Federal Reserve Governor Daniel Tarullo reportedly said that the $50 billion limit was too low.

"Requirements such as resolution planning and the quite elaborate requirements of our supervisory stress testing process do not seem to me to be necessary for banks between $50 billion and $100 billion in assets," he said at a Chicago conference in May.

Companies are designated as systemically important by a group of regulators headed by Treasury Secretary Jack Lew.

Sen. Charles Schumer (D-NY) has supported loosening restrictions for non-banking companies that could face the TBTF designation.

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