The regulatory aim, therefore, is about as close as can be to the traditional microprudential bank regulatory aims of protecting the federal DIF and limiting the use of insured deposits by restricting the scope of bank activities. It is true that the relative lack of geographic and portfolio diversification in many community banks can make them vulnerable to localized economic problems.
But that is just the kind of problem that traditional microprudential regulation has been concerned with addressing. What, then, of the 80 or so U.S. banks that have assets of $ billion or more, but are not among the eight large, complex institutions that have been designated of global systemic importance?