Among the issues taken up by the Financial Stability Oversight Council during its third meeting at the U.S. Department of the Treasury on January 18 was the approval of concentration limit studies.
Among the Council recommendations that were approved are:
--a modification of the concentration limits so that liabilities of any financial company that is not subject to consolidated risk-based capital rules that are substantially similar to those applicable to bank holding companies shall be calculated for purposes of the concentration limit pursuant to GAAP or other appropriate accounting standards applicable to such company, until such time that these companies may be subject to risk-based capital rules or are required to report risk weighted assets and regulatory capital.
--The concentration limit should be modified to provide that a transaction covered by section 622 shall be considered to have violated the concentration limit if the total consolidated liabilities of the acquiring financial company upon consummation of the transaction would exceed 10 percent of the average amount of aggregate consolidated liabilities of all financial companies for the two most recent calendar years.
--The concentration limit under section 622 should be modified to provide that, with the prior written consent of the Board, the concentration limit shall not apply to an acquisition of any type of insured depository institution in default or in danger of default.
The Council also approved two other matters: the Volcker Rule and a proposed rule on which nonbank financial institutions should be designated for heightened supervision. The Volcker Rule, more formally known as Section 619 of the Dodd-Frank Act, prohibits proprietary trading activities and certain private fund investments.
Wednesday, January 19, 2011
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