The Federal Reserve proposed a rule to implement Section 622 of the Dodd-Frank Act, which prohibits the combination of financial companies if the resulting company’s liabilities account for more than 10% of the aggregate consolidated liabilities of all financial firms.
The rule would apply to all insured depository institutions, bank and S&L holding companies, foreign banks and nonbanks subject to Financial Stability Oversight Council supervision. It defines liabilities as the difference between risk-weighted assets — adjusted to reflect exposures deducted from regulatory capital — and total regulatory capital.
Comments are due on the proposal by July 8.
Read the proposed rule.