How Some Small Banks Are Firing the Fed
As benefits of the holding-company structure fade, banks are cutting costs with self-administered regulatory relief
By Christina Rexrode
Updated Nov. 9, 2017 8:54 p.m. ET

Bank of the Ozarks OZRK -0.58% wanted to cut costs, so it ditched the Fed.

The Little Rock, Ark., bank was regulated by the Federal Reserve, the Federal Deposit Insurance Corp., a state banking agency and others. It figured one way to reduce expenses would be to remove a layer of oversight.

So, the bank in June shed its holding-company structure, an umbrella corporation regulated by the Fed. With that gone, the Fed was out of the picture.


No Holds Barred
The biggest U.S. banks and thrifts operating without a holding company structure, by total assets at end of third quarter

First Republic Bank $84.3B

Signature Bank 41.3

Sallie Mae Bank 20.9

Bank of the Ozarks 20.8

BancorpSouth Bank 14.8

BMW Bank of North America 9.9

TowneBank 8.6

Dollar Bank Federal Savings Bank 8.1

Farmers & Merchants Bank of Long Beach 7.5

Opus Bank 7.3

Source: S&P Global Market Intelligence


“We didn’t really need to be regulated by both,” said Chief Executive George Gleason, referring to the FDIC and the Fed. Although the bank hasn’t detailed savings, it expects to reduce administrative, accounting and regulatory costs.

Cutting costs holds obvious appeal for banks at a time when tepid economic growth, superlow interest rates and stringent regulation have kept profitability in check. But dollars and cents aren’t the only driver of decisions like Bank of the Ozarks’: Changes in U.S. banking laws in recent decades have limited the advantage of the holding company structure for many firms, and the pro-business shift in Washington has helped embolden some bankers.

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https://www.wsj.com/articles/how-some-sm...-fed-1510223401