Joint Release/Agencies Finalize Rule to Reduce the Impact of Large Bank Failures — 2020-10-20

Board of Governors of the Federal Reserve System Joint Release Federal Deposit Insurance Corporation Office of the Comptroller of the Currency Agencies Finalize Rule to Reduce the Impact of Large Bank Failures The federal bank regulatory agencies today finalized a rule to limit the interconnectedness and reduce the impact from failure of the largest banking organizations. The final rule is substantially similar to the proposal announced last year and complements other measures that the agencies have taken to limit interconnectedness among the largest banking organizations. U.S. global systemically important bank holding companies, or GSIBs, as well as U.S. intermediate holding companies of foreign GSIBs, are required to issue debt with certain features under the Federal Reserve Board’s “total loss-absorbing capacity,” or TLAC, rule. That debt could be used to recapitalize the holding company during bankruptcy or resolution if it were to fail.