Proposed Rule Represents Continued Trend Toward Increasing Prudential Requirements for Non-GSIB Banking Organizations with $100 Billion or More in Total Assets
On August 29, 2023, the Federal Reserve, the FDIC, and the OCC (the “Agencies”) issued a proposed rule that would require certain depository institution holding companies, certain U.S. intermediate holding companies (“IHCs”) of foreign banking organizations (“FBOs”), and certain insured depository institutions (“IDIs”) to have minimum levels of outstanding long-term debt (“LTD”). The Agencies maintain that the requirements would “improve the resolvability of [these banking organizations] because LTD can be used to absorb loss and create equity in resolution.” The Agencies further explain that imposing the LTD requirement at the IDI level “would give the FDIC greater flexibility, including the potential to transfer all deposit liabilities (including uninsured deposit liabilities) of a failed IDI to an acquirer or to a bridge depository institution in a manner consistent with the [Federal Deposit Insurance Act’s] least-cost requirement.”
By proposing to extend the… Read more
