US Reg Round-Up: 09/07/2025
Federal Reserve
Federal Reserve Board's annual bank stress test showed that large banks are well positioned to weather a severe recession, while staying above minimum capital requirements and continuing to lend to households and businesses
27 June 2025
The Federal Reserve Board released the results of its annual bank stress test, demonstrating that all 22 large banks tested are well-positioned to withstand a severe recession while maintaining capital levels above minimum common equity tier 1 (CET1) requirements and continuing to lend. The hypothetical scenario, less severe than 2024’s due to the countercyclical design, included a global recession with a 30% decline in commercial real estate prices, a 33% decline in house prices, a 5.9 percentage point rise in unemployment to 10%, and a corresponding drop in economic output. The aggregate CET1 capital ratio declined by 1.8 percentage points, less than the 2.8% drop in 2024, with projected losses totaling over $550 billion, including $158 billion in credit card losses, $124 billion in commercial and industrial loan losses, and $52 billion in commercial real estate losses. Key factors for the smaller decline include lower loan losses from a milder scenario, reduced private equity losses due to adjusted exposure measurements, and higher net revenue from improved bank performance. The Board proposed averaging stress test results over two years to reduce volatility, which, if finalized, would result in a 2.3 percentage point decline when combined with 2024 results. The Board also plans to address model volatility through public consultation later in 2025. Corrected 2024 results were released concurrently, addressing minor errors in corporate and mortgage loan loss projections without altering the aggregate decline.
Securities and Exchange Commission
SEC Small Business Advisory Committee to Discuss Regulatory Framework for Finders and Continue Exploring Regulation A
07 July 2025
The Securities and Exchange Commission (SEC) announced that its Small Business Capital Formation Advisory Committee will convene on July 22, 2025, at 10 a.m. ET at SEC Headquarters in Washington, D.C., with the meeting open to the public in-person and via webcast on SEC.gov. The agenda focuses on finalizing discussions on regulatory improvements to Regulation A, building on prior committee insights, and exploring the role of “finders”—individuals assisting small businesses with limited capital-raising in private markets. The committee aims to enhance capital access for entrepreneurs, particularly those outside major entrepreneurial hubs. SEC’s Division of Trading and Markets staff will review the 2020 proposal for a limited, conditional exemption from broker registration for finders, with insights from industry experts Gary Ross (Ross Law Group) and Kelley Arena (Golden Hour Ventures). The discussion will cover principles, frameworks, and safeguards to enable finders’ activities while ensuring investor protection.
SEC Publishes Data on Broker-Dealers, Mergers & Acquisitions, and Business Development Companies
26 June 2025
The Securities and Exchange Commission’s Division of Economic and Risk Analysis (DERA) released reports and data on broker-dealers, mergers and acquisitions (M&A), and business development companies (BDCs) to enhance transparency on market trends. The Broker-Dealer Activity in the United States report details a 30% decline in the number of registered broker-dealers from 2010 to 2024, totaling approximately 3,340 by 2024, while their assets grew by $1.7 trillion to $6.4 trillion, indicating industry consolidation. The Analysis of Merger & Acquisition Activity report examines U.S. M&A trends, noting cyclicality tied to market performance, with an average deal value of $3.5 billion (median $0.5 billion), acquirers averaging $40 billion in assets (median $7 billion), and targets averaging $5 billion (median $1 billion). About 75% of deals involved firms in the same industry, and one-third involved those in the same state. The Business Development Company Data Sets provide detailed financial and non-financial data from BDC disclosures, enabling public analysis. These reports aim to clarify market dynamics and support informed decision-making.