Federal Reserve Board finalizes new supervisory rating system for large financial institutions

The Federal Reserve Board on Friday finalized a new supervisory rating system for large financial institutions that is aligned with the core areas most important to supporting a large firm’s safety and soundness and U.S. financial stability.

The Board’s post-crisis supervisory program for large financial institutions focuses on capital, liquidity, and the effectiveness of its governance and controls. In each of those areas, supervisors will use the new rating system to assign a confidential rating to the firms.

The new rating system will apply to all domestic bank holding companies and non-insurance, non-commercial savings and loan holding companies with $100 billion or more in total consolidated assets, which is a change from the $50 billion threshold originally proposed. The new rating system will also apply to U.S. intermediate holding companies of foreign banking organizations with $50 billion or more in total consolidated assets as proposed.

The Federal Reserve will continue to apply its existing rating system for bank holding companies with less than $100 billion in total consolidated assets. The existing rating system will also be adopted for non-insurance, non-commercial savings and loan holding companies with less than $100 billion in total consolidated assets.

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