The Federal Reserve issued a final rule implementing enhanced prudential standards for large banks under Section 165 of the Dodd-Frank Act.
The rule — which applies to U.S.-based banks and bank holding companies with over $50 billion in assets, as well as foreign banks with over $50 billion in U.S. assets — incorporates previously issued capital planning and stress testing requirements as prudential standards. These banks will also be subject to higher risk management and liquidity risk standards and will be required to conduct liquidity stress tests and hold a 30-day buffer of high-quality liquid assets.
The rule also requires U.S.-based banks with over $10 billion in assets to create enterprise-wide risk committees and institutes stress testing for foreign banks with over $10 billion in U.S. assets. The rule takes effect Jan. 15, 2015, for U.S. banks; July 1, 2016, for foreign banks; and Jan. 1, 2018 for the leverage ratio on foreign banks’ intermediate holding companies.
Read the final rule.