A Whole New Set of Random Numbers to Enjoy...

One of the most enjoyable parts of regulatory reform is having a whole new set of capricious numeric thresholds thrust upon us.  The Dodd-Frank Act of last month is no exception.

$50 billion in assets connotes "systemically important" bank holding companies worthy of scrutiny by the newly authorized Financial Stability Oversight Council. $10 billion in assets requires a regulated financial company to conduct annual stress tests.  $1 billion markes the dividing line between covered and exempted financial institutions for purposes of the new executive compensation disclosures and limitations, while $500 million in assets triggers new leverage capital requirements for small bank holding companies.  $150 million signifies the dividing line between hedge funds that do and don't need to register, and $1 million in assets (exclusive of the value of a residence) now defines an accredited investor under Rule 215.

Isn't this fun?  The best part is that such rounded, unfathomable tallies rarely get adjusted later on for inflation.

For a broad summary of the mammoth legislation (and its curious dollar limits) see http://www.davispolk.com/publications.

---JSC, 8/9/10