New Prudential Framework for Domestic and Foreign Banking Organizations
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Key takeaways:
- On November 1, 2019, the Federal Reserve Board (the “FRB”) finalized significant changes to the prudential framework applicable to bank holding companies, certain savings and loan holding companies and foreign banking organizations (together, “covered firms”). The FRB, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation also finalized a parallel rulemaking focused on the applicability thresholds for regulatory capital and liquidity requirements.
- The final rules create four categories of prudential standards for covered firms with $100 billion or more in an asset measure, with increasing requirements based on size and other risk-based indicators.
- Although the final rules reduce requirements for covered firms in various respects, they also will introduce certain requirements that are more stringent compared to those in place today.