On January 5, 2012, the Federal Reserve Board ("FRB") published in the Federal Register a notice of proposed rulemaking (77 Fed. Reg. 594 (Jan. 5, 2012)) that would implement the enhanced prudential standards required to be established under Section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), and the early remediation requirements established under Section 166 of the Dodd-Frank Act. See Federal Reserve Board Toughens Oversight of SIFI's: Enhanced Prudential Standards.
The proposed rule focuses on seven areas of oversight for Systemically Important Financial Institution ("SIFI's" – larger nonbank financial companies and bank holding companies with total consolidated assets of $50 billion or more): (1) Risk-Based Capital and Leverage Requirements; (2) Liquidity Requirements; (3) Single-Counterparty Credit Limits; (4) Risk Management Requirements; (5) Stress Testing Requirements; (6) Debt-to-Equity Limits; and (7) Early Remediation Framework.
On March 2, 2012, the FRB acknowledged the "range and complexity of the issues addressed in the rulemaking," and as a result determined that an extension of the end of the public comment period from March 31, 2012, to April 30, 2012, is appropriate. In addition to inviting comment on the rule generally, the notice of proposed rulemaking solicited comments as to specific key aspects of the proposal from the industry, consumer groups, and the general public. This extended comment period provides an important opportunity for stakeholders to address the FRB's proposal and offer ways to improve any eventual final rulemaking.
This article is presented for informational purposes only and is not intended to constitute legal advice.
