The Fed Is Lowering the Bar for Mega Banks: Here’s Why You Should Be Worried

The Fed’s New “Pragmatism”: Lower the Bar, Raise the Risk Imagine you run a business where you’re graded on competence, risk management, and governance. For years, you’ve failed to meet the most basic expectations. Your response? Lobby the referees to redefine “failure” so you can keep expanding anyway. This, in essence, is the Federal Reserve’s latest proposal: make it easier for large banks—many of which are already systemically dangerous—to be labeled “well managed.” Under the current system, if a megabank receives a single “deficient” rating in one category—say, governance or liquidity—it can’t be considered well managed. This designation triggers restrictions: no acquisitions, no unchecked growth, no further concentration of power. But that threshold is about to be lowered. The new…