TIER Act Raises Bank Oversight Thresholds to $370 Billion, Exempting Dozens of Large Banks from Stricter Rules

The “Tailoring and Indexing Enhanced Regulations Act of 2025,” or TIER Act, is a major shake-up of how the government regulates large financial institutions. Essentially, this bill raises the bar for what counts as a “too big to fail” bank that needs extra supervision. It significantly increases the asset thresholds across several key banking laws, including the Federal Reserve Act and the Financial Stability Act of 2010. For instance, the threshold for enhanced Federal Reserve supervision is jumped from $100 billion to $150 billion, and other crucial thresholds—like those determining which banks face stricter capital and liquidity requirements—are moved from $250 billion all the way up to $370 billion (SEC. 2).

Who Gets to Play by Easier Rules?

This is where the real-world impact hits. After the 2008 financial crisis, laws like Dodd-Frank established enhanced prudential standards—stricter rules for things like capital reserves and stress testing—for banks above certain asset sizes. The idea was to prevent systemic risk. By raising these thresholds, the TIER Act effectively graduates a whole cohort of large regional and national banks out of the strictest oversight category. If your bank has, say, $300 billion in assets, it was previously subject to the highest level of scrutiny. Now, under the new $370 billion limit, it gets to shed some of those expensive compliance requirements. For the bank, this means lower operating costs and potentially higher profits. For the public, it means a significant chunk of the banking system will operate with less of a regulatory safety net (SEC. 2).

The Automatic Deregulation Feature

Section 3 of the TIER Act introduces a fascinating, and potentially concerning, mechanism: mandatory, automatic inflation adjustments. Starting in 2031, the Federal Reserve must adjust these regulatory thresholds every five years based on the growth of the current-dollar U.S. Gross Domestic Product (GDP). The stated goal is to ensure that regulations don't accidentally ensnare banks that only grew because of economic inflation, not because they actually became larger players in the market. However, this essentially bakes deregulation into the system. Every five years, the bar for enhanced supervision automatically gets higher, meaning more banks will consistently slip out of the stricter oversight category without Congress having to lift a finger. This move transfers significant power to economic metrics rather than legislative review, and it guarantees that the regulatory net will keep shrinking relative to the size of the overall economy (SEC. 3).

The Trade-Off for Taxpayers

For the average person, this bill is a classic regulatory trade-off. On one hand, banks argue that these enhanced regulations are costly, slowing down lending and making financial products more expensive. Reducing these burdens might, in theory, lead to more efficient banking and lower costs for consumers and small businesses seeking loans. On the other hand, the enhanced standards were put in place to protect the financial system—and by extension, taxpayers—from having to bail out large failing institutions. When you increase the threshold for enhanced oversight from $250 billion to $370 billion, you are essentially increasing the size of the institution that the government is willing to let fail without the benefit of the strongest regulatory safeguards. This means taxpayers and the public bear more systemic risk, even if it makes banking slightly cheaper today. When dealing with institutions holding hundreds of billions in assets, less oversight means higher stakes for everyone (SEC. 2, SEC. 3).