This story appeared in Bank Digest.
The Federal Reserve Board has issued a proposed rule that would require global systemically important banks and foreign GSIBs operating in the United States to meet a new long-term debt requirement and a new "total loss-absorbing capacity" requirement. According to the agency's press release, the new requirements would bolster financial stability by improving the ability of banks covered by the rule to withstand financial stress and failure without imposing losses on taxpayers. The agency said the requirements would improve the prospects for the orderly resolution of a failed domestic GSIB and would strengthen the resiliency of all GSIBs.
In addition, the parent holding company of a domestic GSIB would be required to avoid entering into certain financial arrangements that would create obstacles to an orderly resolution under the proposal. The release said the proposed rule also includes regulatory capital deductions for Fed-regulated banking firms that hold unsecured debt of the parent holding companies of domestic GSIBs.
- Statement by Chairman Martin J. Gruenberg
- Fed Memo
- Statement by Chair Janet L. Yellen
- Statement by Governor Daniel K. Tarullo
- Statement by Governor Lael Brainard