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Capital and Prudential Standards Blog

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Brown-Vitter Bill: Commentary and Analysis

The bill announced by Senators Sherrod Brown (D-Ohio) and David Vitter (R-La.) is the latest volley in the ongoing debate about whether financial reform has gone far enough in ending the risk that some banks are too big to fail. Although it is highly unlikely that the Brown-Vitter bill, in its current form, will become law, its erroneous assumptions and assertions, as well as the policy measures proposed by the bill, could resurface, either in other bills or as pressure on regulators to transform the financial regulatory landscape.…  Read More

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Federal Reserve Issues Final Rule for Determining When a Company is “Predominantly Engaged in Financial Activities” for Purposes of Title I of the Dodd-Frank Act

Today, the Federal Reserve issued a final rule for determining when a company is “predominantly engaged in financial activities” for purposes of Title I of the Dodd-Frank Act.  The rule will be used by the Financial Stability Oversight Council (FSOC) when it considers the potential designation of a nonbank financial company as systemically important.  Under Title I of the Dodd-Frank Act, a nonbank financial company can be designated as systemically important by the FSOC only if it is “predominantly engaged in financial activities.”

A nonbank financial company that is designated as systemically important by the FSOC will be subject to consolidated supervision by the Federal Reserve and a host of new Dodd-Frank enhanced prudential standards including capital, liquidity, stress testing, single counterparty credit limits, enhanced risk management standards, resolution planning requirements and an early remediation framework.…  Read More

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