The Federal Reserve Board issued a final rule to implement section 622 of the Dodd-Frank Act, which generally prohibits a financial company from combining with another company if the ratio of the resulting company’s liabilities exceeds 10% of the aggregate consolidated liabilities of all financial companies.
The Fed has made minor changes in response to comments requested when the rule was proposed in May. Under the final rule, if a financial company has reached the 10% concentration limit, the company could not acquire control of another company under merchant banking authority. The final rule also adds an exemption to clarify that a financial company may continue to engage in securitization activities if it has reached the limit.
The final rule will be effective on January 1, 2015.