Federal Reserve Issues Final Regulation Implementing Dodd-Frank Section 165 Enhanced Prudential Standards For Large US And Non-US Banking Organizations

Keywords: Federal Reserve, Dodd-Frank, Section 165

Introduction

On February 18, 2014, the Board of Governors of the Federal Reserve System (FRB) approved a final rule (Final Rule) implementing the enhanced prudential standards contained in section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd- Frank Act) for US bank holding companies (BHCs) and foreign banking organizations (FBOs).¹ The Final Rule and accompanying preamble comprise over 400 pages and, despite substantial criticism of the proposals, in many respects closely track the separate proposals for large US BHCs (Domestic Proposal) and for large FBOs (FBO Proposal) issued by the FRB in December 2011 and December 2012, respectively.² Thus, under the Final Rule, US BHCs and FBOs with at least $50 billion in total consolidated assets will be subject to heightened capital, liquidity, risk management, and stress testing requirements. These requirements will generally take effect for