Fed finalizes rules to align regulations with domestic, foreign bank risk profiles

This story appeared in Bank Digest.                                   

At its Oct. 10, 2019, open meeting, the Federal Reserve Board finalized rules that tailor its regulations for domestic and foreign banks to more closely match their risk profiles. According to the Fed, the rules "reduce compliance requirements for firms with less risk while maintaining the most stringent requirements for the largest and most complex banks."

In particular, the rules establish a framework that pigeonholes banks with $100 billion or more in total assets into four different categories based on several factors—including "asset size, cross-jurisdictional activity, reliance on short-term wholesale funding, nonbank assets, and off-balance sheet exposure." As communicated by the Fed, the rules "build on the Board's existing practice of tailoring its requirements and are consistent with changes made by the Economic Growth, Regulatory Relief, and Consumer Protection Act." The rules take effect 60 days after their publication in the Federal Register.

The Fed has also issued a notice of proposed rulemaking that would amend its assessment rule (Regulation TT) to raise the minimum threshold for being considered an assessed company from $50 billion to $100 billion in total consolidated assets for bank holding companies and savings and loan holding companies and adjust the amount charged to assessed companies with total consolidated assets between $100 billion and $250 billion to reflect changes in supervisory and regulatory responsibilities resulting from the Economic Growth, Regulatory Relief, and Consumer Protection Act. Comments must be received by Dec. 9, 2019.