The Fed has finalized its proposal adjusting the assessment fees charged to financial institutions to align with the revised tailoring framework prudential standards to institutions based on their risk profiles.
As required by the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), the Federal Reserve Board has issued a final rule modifying the annual assessment fees for its supervision and regulation of large financial companies to align with the revised tailoring framework prudential standards to institutions based on their risk profiles. The final rule raises the threshold at which fees are assessed for bank holding companies and savings and loan holding companies from $50 billion to $100 billion in total consolidated assets. Additionally, it adjusts the amount charged to certain bank holding companies and savings and loan holding companies following changes from the Fed related to the EGRRCPA. The final rule is nearly identical to the Notice of Proposed Rulemaking, which was issued in November 2019, with one minor clarification regarding the use of the risk-based categories for tailoring standards applied to foreign bank holding companies. The final rule will be effective 30 days after publication in the Federal Register.
In November 2019, the Fed published its proposal to amend Reg. TT—Supervision and Regulation Assessments of Fees (12 CFR Part 246) to raise the minimum threshold for being considered an assessed company from $50 billion to $100 billion in total consolidated assets for bank holding companies and savings and loan holding companies.
The Fed proposed raising the minimum threshold for being considered an assessed company from $50 billion to $100 billion in total consolidated assets for bank holding companies and savings and loan holding companies. The proposed rule also would adjust the amount charged to assessed companies with between $100 billion and $250 billion in total consolidated assets to reflect changes in supervisory and regulatory responsibilities resulting from EGRRCPA. The proposal would align the assessment framework with the Board’s application of prudential standards based on banking organizations’ risk profiles (see Banking and Finance Law Daily, Oct. 11, 2019).
Change from proposal. The Fed made one change from the proposal in the fine rule, clarifying that foreign banking organizations that are assessed companies should look to the categorization of the combined U.S. operations of the foreign banking organization, as determined by the Fed’s tailoring framework, to determine eligibility for the adjusted assessment rate. This is because for foreign banking organizations, size and risk-based indicators are calculated separately for combined U.S. operations and intermediate holding companies. As such, foreign banking organizations with intermediate holding companies may be subject to different categories of standards at the intermediate holding company and the combined U.S. operations levels of the organization.
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