Federal Reserve Board Proposes Heightened Prudential Requirements for Large Bank Holding Companies and Non-Bank SIFIs

On December 20, 2011, the Federal Reserve Board issued a long-awaited proposed rule to implement Sections 165 and 166 of the Dodd-Frank Act, entitled “Enhanced Prudential Standards and Early Remediation Requirements for Covered Companies.” The proposal provides the architecture for the imposition of heightened prudential standards on large bank holding companies and “systemically important” financial institutions targeted by the Dodd-Frank Act, but leaves significant details to future proposals.

The memorandum below provides a high-level analysis of the proposal and identifies certain key takeaways for financial institutions and other market participants. It also includes a two-page chart showing the dates on which the proposed heightened standards would be applied to large bank holding companies and non-bank SIFIs.