Another Brick in the Wall: The Fed Reproposes Single-Counterparty Credit Limits for Large Banking Organizations

PLI Webcast

06/14/2016 01:00 p.m. - 02:00 p.m. EDT

Banking + Financial Services, Capital Markets, Financial Institutions + Financial Services, Investment Management, and Financial Services

Oliver I. Ireland


On March 4, 2016, the Board of Governors of the Federal Reserve System (the “Fed”) issued a Notice of Proposed Rulemaking (“NPRM”), inviting comment on reproposed rules (the “Reproposed Rules”) that would establish single counterparty credit limits for U.S. bank holding companies (“BHCs”) and foreign banking organizations (“FBOs”) with at least $50 billion in total consolidated assets. Pursuant to section 165(e) (“section 165(e)”) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Fed is required to prescribe rules that limit the amount of credit exposure that U.S. BHCs and FBOs can have to an unaffiliated company to reduce the risks that may arise from such a counterparty’s sudden failure. In addition to the NPRM, the Fed also issued a white paper (the “White Paper”) that provides the analytical and quantitative reasoning for the Reproposed Rules’ more stringent 15% limit for credit exposures between systemically important financial institutions (“SIFIs”).

During the session we will discuss:

  • Exposure limits for bank holding companies and foreign banking organizations;
  • Limit Tiers;
  • Who is a counterparty;
  • Economic Interdependence;
  • Risk mitigants—net credit exposure;
  • Look through for investment funds, securitizations and SPVs; and
  • Exemptions.


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