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Federal Reserve Unveils Proposal on Dodd-Frank Enhanced Prudential Standards and Early Remediation Requirements

January 05, 2012

By THE GLOBAL BANKING AND PAYMENT SYSTEMS PRACTICE

This client alert discusses the Federal Reserve Board's proposed rule, issued December 20, 2011, to implement the enhanced prudential standards and early remediation requirements of Sections 165 and 166 of the Dodd-Frank Act. The Section 165 enhanced prudential standards are designed to strengthen regulation and supervision of large bank holding companies and systemically important nonbank financial firms designated by the Financial Stability Oversight Council. The enhanced standards would affect a covered companys enterprise-wide operations and address risk-based capital and leverage requirements, liquidity standards, requirements for overall risk management (including establishing a risk committee), single-counterparty credit limits, stress test requirements, and a debt-to-equity limit.The Section 166 early remediation requirements would apply to firms covered by Section 165. Comments are due March 31, 2012.