FRB Requests Comment on Proposed Rulemaking to Implement Section 622 of Dodd-Frank

The Board of Governors of the Federal Reserve System ("FRB") is requesting comment on a proposed rule that would implement Dodd-Frank Section 622("Concentration Limits on Large Financial Firms"). Section 622 prohibits a financial company from combining with another company if the ratio of the resulting financial company's liabilities exceeds a certain percentage of the aggregate consolidated liabilities of all financial companies.

Specifically, Section 622 of Dodd-Frank added Section 14 to the Bank Holding Company Act to establish a financial sector concentration limit; this limit would prohibit a financial company from merging or consolidating with, or acquiring, another company if the resulting company's liabilities upon consummation would exceed 10 percent of the aggregate liabilities of all financial companies as calculated under that section.

Companies subject to the concentration limit would include insured depository institutions, bank holding companies, savings and loan holding companies, foreign banking organizations, companies that control insured depository institutions, and nonbank financial companies designated by the Financial Stability Oversight Council (the "FSOC") for FRB supervision.

Section 622 requires that the FSOC complete a study regarding the impact of any such concentration limit on financial stability, which was published in January 2011, and required the FRB to adopt implementing regulations reflecting the FSOC's study. The FRB's proposed regulation would implement Section 622's concentration limit, as modified by the FSOC's recommendations. In particular, under the proposed regulation, the FRB would measure and disclose the aggregate liabilities of financial companies annually, and would calculate aggregate liabilities as a two-year average. The proposed regulation would also establish reporting requirements for certain financial companies that otherwise do not file regulatory financial reports.

Comments on the proposed regulation must be submitted by July 8, 2014.