Group of professionals discuss finance

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Banking and Finance Law Daily, November 20, 2018

FDIC seeks comments on capital and liquidity thresholds

By John M. Pachkowski, J.D.

At its Nov. 20, 2018, open meeting, the Federal Deposit Insurance Corporation’s Board of Directors approved a notice of proposed rulemaking that would establish a revised framework for large U.S. banking organizations and their subsidiary depository institutions—banking organizations—for determining application of the regulatory capital rule, the liquidity coverage ratio (LCR) rule, and the proposed net stable funding ratio (NSFR) rule based on a banking organization’s risk profile. Comments on the proposed rulemaking are due by Jan. 22, 2019.

One board member, Martin J. Gruenberg, voted "no" on the proposed rulemaking.

The Federal Reserve Board has previously approved the proposed rulemaking (see Banking and Finance Law Daily, Oct. 31, 2018). In most likelihood, with the Comptroller of the Currency sitting on the FDIC’s board, the Office of the Comptroller of the Currency will approve the proposed rulemaking as well.

Proposed rule. The proposed rulemaking would more closely align the regulatory requirements that apply to large banking organizations with their risk profiles and would place banking organizations, with total assets of more than $100 billion into one of four categories. These four categories are based on based on size, cross jurisdictional activity, weighted short-term wholesale funding, off-balance sheet exposure, and nonbank assets.

Thoughtful approach. During the meeting, FDIC Chairman Jelena McWilliams called the proposed rulemaking a "thoughtful approach to tailoring the application of prudential standards within the banking industry" and "is something that we should continue to explore for banks of all sizes and risk profiles." She further noted, "The cumulative expected decrease in capital among banks with total consolidated assets above $100 billion is less than 1 percent."

"Unnecessarily weaken" protection. In voting "no" on the proposed rulemaking, Gruenberg noted that "[a] consequence of the revised framework would be to reduce significantly the liquidity requirements for banking organizations with assets between $100 billion and $700 billion." He added, "this would, in my view, unnecessarily weaken a central post-crisis prudential protection for the financial system and place the Deposit Insurance Fund at greater risk."

MainStory: TopStory BankingFinance BankHolding CapitalBaselAccords DoddFrankAct FedTracker FinancialStability PrudentialRegulation

Back to Top

Banking and Finance Law Daily

Introducing Wolters Kluwer Banking and Finance Law Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.


A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.