The top regulator at the Federal Reserve has provided more clarity into how the agency plans to regulate banks between $100 billion and $250 billion, following the passage of the Dodd-Frank relief bill earlier this year.

Perhaps most importantly, The Economic Growth, Regulatory Relief and Consumer Protection Act raised the threshold for banks considered to be globally systemically important from $50 billion to $250 billion.

Randal Quarles, vice chairman for supervision at the Federal Reserve, said in a speech Wednesday that the agency plans to regulate these mid-sized institutions based on a number of different factors including size, cross-border activity and a firm’s use of short-term wholesale funding, among others.

“It seems appropriate to me that a path forward for tailoring supervision and regulation of large banks should not ignore size, but consider it as one factor – although only one factor – along with other factors,” said Quarles. “The systemic effect of a bank’s failure or distress is positively correlated with that organization’s business, operational and structural complexity. Generally, the more complex a banking organization is, the greater the expense and time necessary to resolve it.”

Quarles acknowledged that empirical research done at the Fed shows that stress among larger banks does more significant harm to the economy than stress at smaller banks, even after controlling for the aggregate size of bank failures.

But he also stated that considering additional factors might help provide a better model for regulation than just size alone.

One of those factors was cross-border activity, which measure assets and liabilities related to transactions with foreign banks, individuals and companies, among others.

“This factor measures both a firm’s complexity and resolvability, as foreign operations add operational complexity in normal times and complicate the ability of the firm to undergo an orderly resolution in times of stress,” he said.

Another factor Quarles mentioned was a firm’s use of short-term wholesale funding, which may help determine an institution’s liquidity vulnerability.

Historically, reliance on short-term, uninsured funding from sophisticated funding sources has created the chance of large-scale funding runs and can lead to “fire sale” effects that may impact broader financial stability.

Quarles’ speech also hinted that banks between $100 billion and $250 billion may face a lighter load of stress testing and a break from filing resolution plans.

Quarles essentially said in his speech that stress testing would be incorporated to the new regulatory framework, but that it would not be based solely on size.

“For those below $250 billion in assets, the statute requires supervisory stress tests to be conducted ‘periodically,’ which suggests the legislature wanted us to at least consider a rhythm other than annually,” he said. “Additionally, less complex and less interconnected firms could be exempted from requirements to calculate risk-weighted assets under the models-based advanced approaches to capital.”