Regulatory Tailoring for Large Domestic and Foreign Banking Organizations: Banking Agencies Finalize Significant Revisions to the Application of Enhanced Prudential Standards and Capital and Liquidity Requirements to Large U.S. and Foreign Banking Organizations

Sullivan & Cromwell LLP - October 18, 2019
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Over the past week, the federal banking agencies have adopted two final rules that tailor how certain aspects of the post-crisis bank regulatory framework, including certain capital and liquidity requirements and other enhanced prudential standards, apply to (1) large U.S. banking organizations and (2) foreign banking organizations that have significant U.S. operations (“FBOs”).  The final rules assign all domestic bank holding companies with $100 billion or more in total consolidated assets, FBOs with $100 billion or more in combined U.S. assets, and domestic savings and loan holding companies with $100 billion or more in total consolidated assets that are not substantially engaged in insurance underwriting or commercial activities to one of four categories of tailored regulatory requirements.  The final rules retain the general framework of the tailoring proposals applicable to domestic banking organizations that were issued in the fourth quarter of 2018 and the analogous proposals applicable to FBOs issued in the second quarter of 2019, but incorporate “certain targeted changes in response to comments.”  This memorandum describes the final rules and notable differences from the proposals.