Regulators seek end to stricter oversight of Zions Bancorp

WASHINGTON – A panel of federal regulators is proposing the removal of strict government oversight imposed on Zions Bancorp, a big regional bank that received a taxpayer-funded bailout during the 2008 financial crisis.

The unanimous decision by the Financial Stability Oversight Council announced Wednesday is the latest example of a push, under the Trump administration, to relieve regulatory restrictions put into place after the financial meltdown in hopes of averting a similar crisis in the future.

A final action on the Salt Lake City bank is likely within 60 days.

The council was created and empowered by the 2010 Dodd-Frank law to collar some large financial companies with stricter supervision as a way to avert a “too-big-to-fail” situation — when the government is forced to rescue them to head off a broader economic collapse. It tagged Zions as a “systemically important” institution, one so big and crucial that it would threaten the financial system’s stability if it veered toward collapse, because its assets exceed the $50 billion level that automatically triggered the designation.

Zions was among hundreds of banks that received federal bailouts during the crisis. It repaid the $1.4 billion it received by 2012.

Zion has new received approval from two federal agencies to simplify its structure by merging its parent company with its banking business. That means the parent company will no longer be regulated by the Federal Reserve. If the oversight council makes a final decision to remove the designation and shareholders approve, Zions said in a statement it expects to complete the merger in late September.

The bank’s shares rose 2 per cent.

The council is led by Treasury Secretary Steven Mnuchin and includes Federal Reserve Chair Jerome Powell and Jay Clayton, chair of the Securities and Exchange Commission. Those officials and nearly all the other seven members were appointed by President Donald Trump.