For second time, comment periods extended for board of directors, rating systems proposals

Comment periods on proposals for enhancing the effectiveness of boards of directors, and installing a new ratings system for large financial institutions, have been extended by the Federal Reserve Board to Feb. 15.

The comment periods were slated to end Nov. 30. The board said it was extending the due dates – by two and a half months – “to allow interested persons more time to analyze the issues and prepare their comments.”

This is the second extension of the comment periods for both proposals, which were originally proposed in August. The first comment period was set to expire Oct. 16.

The proposal on boards of directors, according to the Fed, is intended to refocus the central bank’s supervisory expectations on the core responsibilities for the boards of directors of the largest firms, “which will promote the safety and soundness of the firms. ”Core responsibilities, the Fed noted, include oversight of the types and levels of risk a firm may take and aligning the firm’s business strategy with those risk decisions. The proposal, the Fed also stated, would “reduce unnecessary burden for the boards of smaller institutions.”

Under the second proposal, the Fed has proposed changes to the rating system to incorporate the regulatory and supervisory changes made by the Federal Reserve since 2012 (when the most recent supervisory program for the largest firms were introduced), which focus on capital, liquidity, and the effectiveness of governance and controls, including firms’ compliance with laws and regulations. The system would only apply to large financial institutions, such as domestic bank holding companies and savings and loan holding companies with $50 billion or more in total consolidated assets, as well as intermediate holding companies of foreign banking organizations operating in the United States.

Firms with less than $50 billion in total consolidated assets, including community banks, would continue to use the current rating system, which reflects long-standing supervisory practices for those firms, the Fed said.

Federal Reserve Board extends comment periods for two related proposals until February 15, 2018