Fed Board considers prudential standards during open meeting next Wednesday

Prudential standards for large bank holding companies, savings and loan holding companies, and state member banks will be considered Oct. 31 during an open meeting of the Federal Reserve Board that will be webcast live, according to a notice published on the Fed’s website.

Expectations are that the board will begin to define what prudential standards will apply to banking institutions with more than $100 billion in assets. The recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act (EGGRCPA, S. 2155) revises from $50 billion to $250 billion the asset-size threshold for banking institutions statutorily subject to enhanced prudential standards, but it also allows the Fed to determine what standards it will apply to institutions over $100 billion.

Randal Quarles, the Fed’s vice chairman for supervision, told the Senate Banking Committee during an Oct. 2 hearing that the board has made issuing a proposal to tailor enhanced prudential stands for institutions between $100 billion and $250 billion in assets “our highest priority.” By statute, those standards cannot be based on size alone but must also take into account other factors, such as capital structure, complexity and risk.

Quarles, in his testimony, said topics for this framework could include capital and liquidity rules, resolution planning, and stress testing.

Fed Board meeting notice

Federal Register notice