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Capital and Prudential Standards Blog

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Home Archive for category "Federal Reserve" (Page 5)
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Davis Polk Enhanced Prudential Standards Resources Website

Ahead of next week’s Dodd-Frank enhanced prudential standards (EPS) final rule, we have created an EPS resources website: USBasel3.com/EPS.  The website contains background materials and Davis Polk’s analysis and visuals on EPS proposals for large domestic and foreign banking organizations, U.S. Basel III, stress testing, liquidity, risk governance, counterparty credit exposures and other prudential regulatory developments.

Over the coming weeks, we will be preparing a series of materials relating to the EPS final rule, including high-level overviews, blacklines, comparisons, memos and visuals. …  Read More

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Who Knew that CLOs were Hedge Funds?

U.S. financial regulators found themselves on the receiving end of an outpouring of concern from lawmakers last Wednesday about the risks to the banking sector and debt markets from the treatment of collateralized loan obligations (“CLOs”) in the Volcker Rule final regulations.  Regulators and others have come to realize that treating CLOs as if they were hedge funds is a problem and we now understand from Governor Tarullo’s testimony that the treatment of CLOs is at the top of the list for the new interagency Volcker task force.  …  Read More

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Federal Reserve to Vote on Final Dodd-Frank Enhanced Prudential Standards

The Federal Reserve has scheduled an open meeting for Tuesday, February 18, 2014, at 3:15 p.m., to vote on a final rule establishing Dodd-Frank enhanced prudential standards for U.S. bank holding companies with ≥$50 billion in total consolidated assets (Large U.S. BHCs) and foreign banking organizations with ≥$50 billion in total consolidated assets (Large FBOs).

By way of background, Section 165 of the Dodd-Frank Act requires the Federal Reserve to establish enhanced prudential standards, including heightened capital standards, liquidity standards, single counterparty credit limits, enhanced risk management requirements, capital stress testing requirements (final rules already issued) and an early remediation framework, for Large U.S.…  Read More

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Governor Tarullo Outlines Federal Reserve’s Prudential Regulatory Priorities for 2014

In his written testimony before the Senate Banking Committee on Dodd-Frank implementation, Federal Reserve Board Governor Daniel K. Tarullo outlined the Federal Reserve’s prudential regulatory and supervisory priorities for 2014.  As discussed further in this blog post, these priorities include, among other things: (1) finalizing, in the “near term,” Dodd-Frank enhanced prudential standards for large domestic and foreign banking firms; (2) proposing, “fairly soon,” to implement the Basel Committee’s risk-based capital surcharge for global systemically important banks (G-SIBs); (3) finalizing, in the “coming months,” higher Basel III supplementary leverage ratio standards for the 8 U.S.…  Read More

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Federal Reserve Issues Guidance to Large Financial Institutions on Managing Foreign Exchange Settlement Risks for Physically Settled Transactions

Today, the Federal Reserve issued a Supervision and Regulation letter (SR letter) regarding the Basel Committee’s February 2013 guidance for managing risks associated with the settlement of foreign exchange transactions.  The Basel Committee’s guidance sets forth seven guidelines for managing foreign exchange transaction settlement risks.  Our earlier blog post on the Basel Committee’s guidance is available here.  The Federal Reserve stated that large financial institutions subject to the SR letter should apply the Basel Committee’s seven guidelines to their foreign exchange activities. …  Read More

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Federal Reserve Advises Large Banking Organizations to Carefully Evaluate Certain Risk-Transfer Transactions

Today, the Federal Reserve issued a Supervision and Regulation letter (SR letter) entitled Risk Transfer Considerations When Assessing Capital Adequacy – Supplemental Guidance on Consolidated Supervision Framework for Large Financial Institutions.

The SR letter applies to U.S. bank holding companies and savings and loan holding companies with consolidated assets of $50 billion or more as well as foreign banking organizations with combined assets of U.S. operations of $50 billion or more (collectively, “large banking organizations”).

The purpose of the SR letter is to provide guidance on how certain risk transfer transactions affect assessments of capital adequacy at large banking organizations. …  Read More

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