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

November 13, 2018

Client Alert
On October 31, 2018, the Federal Reserve Board (FRB) and Office of the Comptroller of the Currency (OCC) 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. A copy of the NPR can be found here. The FDIC is expected to approve the same NPR (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. A copy of the FRB NPR can be found here.

This client alert 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. 

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