Fed Releases Final Rule on Single Counterparty Credit Limits

On Thursday, June 14, the Federal Reserve (Fed) released its final rule regarding single counterparty credit limits for bank holding companies and foreign banking organizations. According to the Fed’s press release:

The final rule, which implements part of the Dodd-Frank Act, is generally similar to the proposal, and applies credit limits that increase in stringency as the systemic footprint of a firm increases. Like the proposed rule, a global systemically important bank holding company, or GSIB, would be limited to a credit exposure of no more than 15 percent of the GSIB's tier 1 capital to another systemically important financial firm, reflecting Board staff's analysis of the increased systemic risk posed when the largest firms have significant exposure to one another.

SFIG previously submitted a comment letter to the Fed in June 2016 regarding the proposed single counterparty credit limits. The final rule incorporates the majority of SFIG’s comments. A recent analysis by Chapman and Cutler, drafting counsel on our letter, details the impact of the final rule on securitizations.

If you would like to join SFIG’s Regulatory Capital & Liquidity Committee or ABCP Committee, please contact Michael.Williams@sfindustry.org.

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