Cohn Slams Arbitrary Thresholds, Hints at $200B+ SIFI Level as Compromise

October 17, 2017

Congressional leaders and the Trump administration are working on a plan to raise the asset threshold for systemically important financial institutions to at least $200 billion, Gary Cohn said yesterday at ABA’s Annual Convention -- while emphasizing the need to move beyond artificial thresholds altogether.

“We do think there is some real agreement on raising levels,” he said. “I think the $50 billion level has an enormous amount of traction in raising that from a legislative perspective,” adding that “there’s a shot” at accomplishing it in 2017 in a bipartisan way. “What we’re arguing about is where we’re going to end up,” he said, hinting that the threshold would be set at a level of “two plus two more numbers”; he later cited $225 billion as a point in the “middle” of discussions.

In conversation with Cohn, ABA President and CEO Rob Nichols emphasized that ABA is “pushing to get rid of these artificial asset thresholds ultimately,” but noted that raising them now would be a positive “interim step.”

“I don’t love the fact that we’re creating an artificial line,” Cohn replied. “The idea a bank would turn away a deposit because their balance sheet would get grossed up and be subject to more regulation is a little bit wacky.”

Cohn also discussed tax reform -- emphasizing President Trump’s commitment to lowering corporate rates and growing middle-income wages -- infrastructure permitting changes and the economic situation.