Federal Reserve Proposes Rules to Tailor Enhanced Prudential Standards for Foreign Banking Organizations
On April 8, 2019, the Federal Reserve issued a pair of proposed rulemakings that together would tailor the application of certain enhanced prudential standards under Section 165 of the Dodd-Frank Act to foreign banking organizations based on three categories of risk profiles to which varying prudential standards would apply. The proposed rules follow the increase of the asset size threshold for general application of enhanced prudential standards from $50 billion to $250 billion under the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, and would delineate the three categories of standards based on asset size and other factors such as the degree of a firm’s cross-jurisdictional activity, reliance on short-term wholesale funding, nonbank assets, and off-balance sheet exposures.