Federal Reserve Proposes Enhanced Prudential Standards For Non-US Banking Organizations

Keywords: federal reserve, prudential standards, foreign banking organizations, FBOs

On December 14, 2012, the Board of Governors of the Federal Reserve System (FRB) released a 300-page proposed rule (the Proposal) that would implement Sections 165 and 166 of the Dodd-Frank Wall Street Consumer Protection Act (Dodd-Frank Act) for foreign banking organizations (FBOs).¹ The Proposal would impose heightened prudential requirements (including capital, liquidity, single counterparty credit limits, risk management, stress testing, and early remediation) on the US operations of foreign banking organizations having global consolidated assets of $50 billion or more. However, certain standards would apply to FBOs with consolidated assets of $10 billion or more, regardless of the size of their US operations.²