The U.S. Federal Reserve Board, Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency issued a report on Thursday which recommends, among other things, that the U.S. Congress repeal the authority of financial holding companies (FHCs) to engage in merchant banking, eliminate the grandfathering for certain FHCs to engage in commodities activities, and eliminate an exemption that allows the owners of industrial loan companies to operate outside of the regulatory framework that applies to other corporate owners of insured depository institutions.

The recommended changes will “create a more level playing field among regulated financial institutions and owners of insured depository institutions,” the report says. The changes would also limit the commercial activities of banks, enhancing the safety and soundness of the banking system, according to the report.

A collection of financial industry trade groups, including the U.S. Securities Industry and Financial Markets Association (SIFMA), The Clearing House, the American Bankers Association, the Financial Services Roundtable, and the Financial Services Forum, criticized the report’s recommendations.

In a joint statement released on Thursday, the trade groups said, “We oppose the recommendations announced today to repeal merchant banking and related authorities and believe they are unfortunate and ill-considered.”

In particular, the industry groups oppose the proposed limit on banks engaging in merchant banking. “The regulators have made these recommendations without pointing to any evidence that these activities have ever posed any problem, and have made no attempt to assess the costs to businesses and jobs,” the trade groups say.

The groups also expressed concerns that regulators failed to consider consider costs to the industry. “They have not provided a cost-benefit analysis or a robust justification for such sweeping changes to laws which were heavily negotiated over a very long period of time and by several administrations. While the regulators did not believe that the costs of regulation were worth considering here, we believe Congress should and will consider such costs,” the groups say.