The final rule implementing the financial sector concentration limit required by Section 622 of the Dodd-Frank Wall Street Reform and Consumer Protection Act,1 became effective Jan. 1, 2015. The Board of Governors of the Federal Reserve System approved the final rule2 in November 2014.
Section 622 of the Dodd-Frank Act amended the Bank Holding Company Act (BHCA) to establish the concentration limit, which generally prohibits insured depository institutions, bank holding companies, foreign banking organizations that are treated as bank holding companies (FBOs), savings and loan holding companies, other companies that control an insured depository institution, as well as nonbank financial companies designated by the Financial Stability Oversight Council for supervision by the Federal Reserve (each of the foregoing entities, a “financial company”),3 from engaging in a “covered acquisition” if the resulting company’s total consolidated liabilities upon consummation would exceed 10 percent of the aggregate consolidated liabilities of all financial companies as calculated under Section 622 (Total Financial Sector Liabilities). A “covered acquisition” (as discussed below) includes merging or consolidating with, acquiring all or substantially all of the assets of, or acquiring control of any company.
