FDIC Board to consider interim final, two final rules – including long-awaited net stable funding ratio regulation

One interim final and two final rules – including a final regulation on the net stable funding ratio (NSFR), liquidity risk measurement standards and disclosure requirements – will be considered by the board of the federal insurer of bank deposits Oct. 20, the board said Tuesday.

The NSFR has been under consideration since at least 2016 by the Federal Deposit Insurance Corp. (FDIC), the Federal Reserve, and the Office of the Comptroller of the Currency (OCC). In a nutshell, the proposal requires banks to maintain a minimum level of stable funding relative to the liquidity of their assets, derivatives, and commitments, over a one-year period.

The proposal, according to the Fed, was designed to “reduce the likelihood that disruptions to a banking organization’s sources of funding will compromise its liquidity position.” It would do that, the Fed said, by requiring banks to maintain sufficient levels of stable funding in order to reduce liquidity risk to the overall banking system. That would also enhance financial stability, the Fed said.

Also under consideration at the Tuesday meeting of the FDIC Board:

  • A final rule on regulatory capital treatment for investments in certain unsecured debt instruments of global systemically important U.S. bank holding companies, certain intermediate holding companies, and global systemically important foreign banking organizations; total-loss absorbing capacity requirements will also be outlined.
  • An interim final rule on applicability of annual independent audits and reporting requirements for fiscal years ending in 2021.

The FDIC Board’s meeting gets underway at 10 a.m. ET; it will be streamed live via the Internet.

FDIC Board meeting agenda, Oct. 20 (10 a.m. ET)