SECTION 165—Enhanced Supervision and Prudential Standards for Nonbank
Financial Companies Supervised by the Board of Governors and Certain
Bank Holding Companies
(1) Purpose. In order to prevent or mitigate
risks to the financial stability of the United States that could arise
from the material financial distress or failure, or ongoing activities,
of large, interconnected financial institutions, the Board of Governors
shall, on its own or pursuant to recommendations by the Council under
section 115, establish prudential standards for nonbank financial
companies supervised by the Board of Governors and bank holding companies
with total consolidated assets equal to or greater than $250,000,000,000
that—
(A) are more
stringent than the standards and requirements applicable to nonbank
financial companies and bank holding companies that do not present
similar risks to the financial stability of the United States; and
(B) increase in stringency, based
on the considerations identified in subsection (b)(3).
(2) Tailored
application.
(A) In general. In prescribing more
stringent prudential standards under this section, the Board of Governors
shall, on its own or pursuant to a recommendation by the Council in
accordance with section 115, differentiate among companies on an individual
basis or by category, taking into consideration their capital structure,
riskiness, complexity, financial activities (including the financial
activities of their subsidiaries), size, and any other risk-related
factors that the Board of Governors deems appropriate.
(B) Adjustment
of threshold for application of certain standards. The Board
of Governors may, pursuant to a recommendation by the Council in accordance
with section 115, establish an asset threshold above the applicable
threshold for the application of any standard established under subsections
(c) through (g).
(C) Risks to financial stability and safety and
soundness. The Board of Governors may by order or rule promulgated
pursuant to section 553 of title 5, United States Code, apply any
prudential standard established under this section to any bank holding
company or bank holding companies with total consolidated assets equal
to or greater than $100,000,000,000 to which the prudential standard
does not otherwise apply provided that the Board of Governors—
(i) determines that application
of the prudential standard is appropriate—
(I) to prevent
or mitigate risks to the financial stability of the United States,
as described in paragraph (1); or
(II) to promote the safety and soundness of the bank holding company
or bank holding companies; and
(ii) takes into consideration the bank holding
company’s or bank holding companies’ capital structure, riskiness,
complexity, financial activities (including financial activities of
subsidiaries), size, and any other risk-related factors that the Board
of Governors deems appropriate.
(1) Resolution plan. The Board of Governors
shall require each nonbank financial company supervised by the Board
of Governors and bank holding companies described in subsection (a)
to report periodically to the Board of Governors, the Council,
and the Corporation the plan of such company for rapid and orderly
resolution in the event of material financial distress or failure,
which shall include—
(A) information regarding the manner and extent to which any insured
depository institution affiliated with the company is adequately protected
from risks arising from the activities of any nonbank subsidiaries
of the company;
(B) full descriptions
of the ownership structure, assets, liabilities, and contractual obligations
of the company;
(C) identification
of the cross-guarantees tied to different securities, identification
of major counterparties, and a process for determining to whom the
collateral of the company is pledged; and
(D) any other information that the Board
of Governors and the Corporation jointly require by rule or order.
(2) Credit exposure report. The Board of Governors
shall require each nonbank financial company supervised by the Board
of Governors and bank holding companies described in subsection (a)
to report periodically to the Board of Governors, the Council, and
the Corporation on—
(A) the nature and extent to which the company has credit exposure
to other significant nonbank financial companies and significant bank
holding companies; and
(B) the
nature and extent to which other significant nonbank financial companies
and significant bank holding companies have credit exposure to that
company.
(3) Review. The Board of Governors and the
Corporation shall review the information provided in accordance with
this subsection by each nonbank financial company supervised by the
Board of Governors and bank holding company described in subsection
(a).
(4) Notice of deficiencies. If the Board of Governors and the Corporation
jointly determine, based on their review under paragraph (3), that
the resolution plan of a nonbank financial company supervised by the
Board of Governors or a bank holding company described in subsection
(a) is not credible or would not facilitate an orderly resolution
of the company under title 11, United States Code—
(A) the Board of Governors and the
Corporation shall notify the company of the deficiencies in the resolution
plan; and
(B) the company shall
resubmit the resolution plan within a timeframe determined by the
Board of Governors and the Corporation, with revisions demonstrating
that the plan is credible and would result in an orderly resolution
under title 11, United States Code, including any proposed changes
in business operations and corporate structure to facilitate implementation
of the plan.
(5) Failure to resubmit credible plan.
(A) In general. If a nonbank financial company
supervised by the Board of Governors or a bank holding company described
in subsection (a) fails to timely resubmit the resolution plan as
required under paragraph (4), with such revisions as are required
under subparagraph (B), the Board of Governors and the Corporation
may jointly impose more stringent capital, leverage, or liquidity
requirements, or restrictions on the growth, activities, or operations
of the company, or any subsidiary thereof, until such time as the
company resubmits a plan that remedies the deficiencies.
(B) Divestiture. The Board of Governors and the Corporation, in consultation with
the Council, may jointly direct a nonbank financial company supervised
by the Board of Governors or a bank holding company described in subsection
(a), by order, to divest certain assets or operations identified by
the Board of Governors and the Corporation, to facilitate an orderly
resolution of such company under title 11, United States Code, in
the event of the failure of such company, in any case in which—
(i) the Board of Governors
and the Corporation have jointly imposed more stringent requirements
on the company pursuant to subparagraph (A); and
(ii) the company has failed, within the 2-year
period beginning on the date of the imposition of such requirements
under subparagraph (A), to resubmit the resolution plan with such
revisions as were required under paragraph (4)(B).
(6) No limiting effect. A resolution plan submitted
in accordance with this subsection shall not be binding on a bankruptcy
court, a receiver appointed under title II, or any other authority
that is authorized or required to resolve the nonbank financial company
supervised by the Board, any bank holding company, or any subsidiary
or affiliate of the foregoing.
(7) No private right of action. No private
right of action may be based on any resolution plan submitted in accordance
with this subsection.
(8) Rules. Not later than 18 months after the
date of enactment of this Act, the Board of Governors and the Corporation
shall jointly issue final rules implementing this subsection.
[12 USC 5365. As
amended by act of May 24, 2018 (132 Stat. 1356, 1357).]
