“Their balance sheets are pretty easily investigated by us and their lending falls in a fairly discrete number of forms,” Torullo said.
Consequently, Torullo suggests raising the threshold to banks holding companies with $100 billion in assets from banks with $50 billion, while others in the industry want it raised to $250 billion, which would only cover the three largest regional banks, Capital One Financial (NYSE: COF), U.S. Bancorp (NYSE: USB) and PNC Financial Service Group (NYSE: PNC).
Investors who want to target the small-cap category in the financial space but still want some steady exposure to larger companies can also consider equal-weight index-based ETFs as well.
For example, the SPDR S&P Bank ETF (NYSEArca: KBE) includes a 42.8% tilt toward mid-caps and 39.2% to small-caps, and the SPDR S&P Regional Banking ETF (NYSEArca: KRE) leans more toward small-caps at 55.8% and micro-caps 12.0%, along with a 26.7% position in mid-caps.
For more information on the financials sector, visit our financial category.