- The Federal Reserve Board approved a rule to prevent concentrations of risk between large banks and their counterparties from undermining financial stability.
- The final rule, which implements part of the Dodd-Frank Act, applies stricter credit limits based on the systemic importance of the firm. A bank holding company with $250B or more in total consolidated assets would be restricted to a credit exposure of no more than 25% of its tier 1 capital to a counterparty.
- Foreign banks operating in the U.S. with at least $250B in total global consolidated assets, and their intermediate holding companies with $50B or more in U.S. assets, would be subject to similar limits.
- The Federal Reserve says the final rule reduces regulatory burden by using common accounting definitions to simplify application of the exposure limits.
- Previously: Fed issues draft to revamp Volcker rule in Dodd-Frank (May 30)
- Related tickers: JPM, BAC, GS,MS,C, WFC,DB,BCS,CS,UBS,ING
- Now read: Citigroup Will Thrive Regardless Of Interest Rates
Original article