Fed Proposes Regulatory Relief for Covered Banks

The Federal Reserve (Fed) met on Wednesday, October 31, to consider regulatory reforms for covered banks. According to their press release, the Fed’s framework would “more closely match the regulations for large banking organizations with their risk profiles.” Firms would be sorted into categories based on several factors, including asset size, cross-jurisdictional activity, reliance on short-term wholesale funding, nonbank assets, and off-balance sheet exposure. Specifically, the framework includes four categories of standards for large banking organizations:

 

Taken together, the Fed estimates that the changes would result in a 0.6 percent decrease in required capital and a reduction of 2.5 percent of liquid assets for all U.S. banking firms with assets of $100 billion or more. Comments on this proposal are due by Tuesday, January 22, 2019.

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