The Federal Reserve is seeking comment on a proposed rule that would require the nation's largest bank holding companies to submit annual capital plans for review.
Under the plan, bank holding companies with total consolidated assets of $50 billion or more would be required to submit forward looking capital plans that demonstrate sufficient capital to continue residential and business lending, even during times of economic stress. Included in the plans, banks would be required to include proposals for capital distributions, including dividend payments or repurchasing or redeeming stocks.
The proposal would formalize the Comprehensive Capital Analysis and Review process conducted earlier this year which reviewed the 19 largest U.S. bank holding companies. The evolving capital review process followed the standardized stress testing conducted by the Federal Reserve in 2009, called the Supervisory Capital Assessment Program.
According to the statement released by the Federal Reserve, 35 U.S. bank holding companies meet or exceed the $50 billion asset threshold and would be impacted by the new rule. The requirements of the proposed capital plans would very in the level of detail and analysis expected based upon the company's size complexity, risk profile and scope of operations.
The requirements are designed to relate to several components included in the Dodd-Frank Wall Street Reform and Consumer Protection Act which calls for enhanced standards for large firms and requires stress tests.
The Federal Reserve plans to finalize the proposed rule this year and implement the requirement in early 2012. Comments regarding the proposed rule will be accepted until August 5, 2011.