Federal Banking Regulators Propose New Bank Holding Company Category System to Apply to Capital and Liquidity Requirements and to Enhanced Prudential Standards

March 2019
The Banking Law Journal

The Federal Reserve Board (“FRB”), Office of the Comptroller of the Currency (“OCC”), and Federal Deposit Insurance Corporation (”FDIC”) approved a notice of proposed rulemaking (“NPR”) that would revise the thresholds for applying regulatory capital and liquidity requirements to banks and bank holding companies (“BHCs”) and otherwise revise some of those requirements (the “Interagency NPR”). Separately, the FRB approved an NPR (the “FRB NPR”) to revise the Regulation YY enhanced prudential standards (“EPS”) and the coverage of the Regulation Y capital planning requirements it issued under Dodd-Frank and to make other regulatory changes.

This article outlines features of the proposals to adjust the applicability of certain capital and liquidity tests and certain EPS for BHCs. Both NPRs were issued in response to the requirements of the 2018 bipartisan banking bill (S. 2155) enacted into law last May, which required the federal banking agencies to end enhanced prudential standards for BHCs with less than $100 billion in assets and, starting 18 months after S. 2155 became law, to end generally such standards for BHCs with less than $250 billion in assets, except for BHCs with at least $100 billion in assets when the agencies determine such standards are appropriate to prevent or mitigate risks to financial stability or to promote the safety and soundness of the affected BHCs. 

This article was originally published by Chapman and Cutler LLP on November 13, 2018, and was republished by The Banking Law Journal in its March 2019 issue. The republished article is posted with permission.

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