Among its many new requirements for banks and their regulators, the Dodd-Frank Wall Street Reform and Consumer Protection Act1 required the Board of Governors of the Federal Reserve System (FRB) to promulgate enhanced prudential standards for large banking organizations and nonbank financial companies that have been deemed to be a systemic risk to the U.S. financial system. “Large” financial institutions have been defined as those with $50 billion or more in consolidated assets. On Dec. 28, 2012, a Notice of Proposed Rulemaking was published in the Federal Register by the FRB regarding the imposition of enhanced prudential standards on non-U.S. banking organizations with banking operations in the United States.2 Comments are requested by March 31, 2013.
The proposed regulations include limits on loans to one counterparty, required stress tests and probably most importantly, the requirement for some non-U.S. banks to establish an intermediate holding company (IHC) for its U.S. subsidiaries. This month’s column provides a broad overview of the Notice and some of its 103 questions on which the FRB has requested comment.
Background
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