Agencies Propose Framework For Applying Prudential Standards To Large Banks

The Federal Reserve Board ("FRB") proposed a rule that would tailor the application of prudential standards to U.S. bank holding companies and apply enhanced standards to certain large savings and loan holding companies. The FRB, FDIC, and Office of the Comptroller of the Currency (collectively, the "agencies") separately proposed changes that would tailor the application of the agencies' capital and liquidity rules to large U.S. banking organizations.

Both proposals would establish categories of prudential standards in order to align requirements with a firm's risk profile. According to the agencies, thresholds based on risk-based indicators, such as size, cross-jurisdictional activity and reliance on wholesale funding, would be used to determine the appropriate set of standards for a particular bank. The categories are: