Federal Reserve System: Enhanced Prudential Standards for Bank Holding Companies and Foreign Banking Organizations
GAO-14-544R: Apr 25, 2014
GAO reviewed the Federal Reserve System's (Federal Reserve) new rule on enhanced prudential standards for bank holding companies and foreign banking organizations. GAO found that (1) the final rule implements certain of the enhanced prudential standards required to be established under section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act for bank holding companies and foreign banking organizations with total consolidated assets of $50 billion or more. The enhanced prudential standards include risk-based and leverage capital requirements, liquidity standards, requirements for overall risk management (including establishing a risk committee), stress-test requirements, and a 15-to-1 debt-to-equity limit for companies that the Financial Stability Oversight Council (Council) has determined pose a grave threat to financial stability. The rule also establishes risk-committee requirements and capital stress-testing requirements for certain bank holding companies and foreign banking organizations with total consolidated assets of $10 billion or more. The rule does not impose enhanced prudential standards on nonbank financial companies designated by the Council for supervision by the Federal Reserve; and (2) the Federal Reserve complied with the applicable requirements in promulgating the rule.