Agencies Issue Final Rule to Strengthen Resilience of Large Banks

On Tuesday, October 20, 2020, the federal bank regulatory agencies issued a press release finalizing a rule strengthening the resilience of large banks by requiring them to maintain a minimum level of stable funding over a one-year period.

The final rule is generally similar to the proposal from May 2016 and includes several changes based on further analysis and public input on the proposal.  In particular, the calibration is now tailored to be consistent with the Economic Growth, Regulatory Reform, and Consumer Protection Act, and matches the tailored calibration of the LCR.  Additionally, the funding requirements for certain assets were modified to better reflect their risks and support the stability of certain funding markets. 

The final rule is effective on July 1, 2021.  Holding companies and any covered nonbank companies regulated by the Federal Reserve will be required to publicly disclose their NSFR levels semiannually beginning in 2023.