The MReport Webcast: Friday 7/10/2015

The debate over whether "too big to fail" has ended and the criteria for designating a bank holding company as "systemically important" under Dodd-Frank has continued this week as lawmakers convened to discuss the controversial law and its effect on the American financial system. Bank holding companies that are designated as "systemically important financial institutions" under Dodd-Frank are therefore "too big to fail" and would receive a taxpayer-funded bailout if their economic stability were to be threatened.

One notable of Wednesday's House Financial Services Financial Institutions and Consumer Credit Subcommittee hearing was that many commentators, including members of Congress and banking regulators, have criticized the way bank holding companies are arbitrarily designated as SIFIs under Dodd Frank. Under the law, the Federal Reserve is required to apply enhanced prudential standards to bank holding companies with $50 billion or more in total consolidated assets – thus creating a SIFI designation for these institutions.

Although Federal Reserve officials determined that economic activity is expanding moderately and job gains are increasing, the federal funds rate will remain the same at a target range of 0 to one-fourth percent, according to the recent Federal Open Market Committee June meeting. Inflation is still running below the Committee’s objective of 2 percent, reflecting earlier drops in energy prices and falling prices of non-energy imports. Looking ahead, the Committee still expects a moderate pace of GDP growth, with continuing job gains and lower energy prices supporting household spending.