On March 4, 2016, the Board of Governors of the Federal Reserve System (the “Fed”) issued a Notice of Proposed Rulemaking (“NPRM”), inviting comment on reproposed rules (the “Reproposed Rules”) that would establish single counterparty credit limits for U.S. bank holding companies (“BHCs”) and foreign banking organizations (“FBOs”) with at least $50 billion in total consolidated assets. Pursuant to section 165(e) (“section 165(e)”) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Fed is required to prescribe rules that limit the amount of credit exposure that U.S. BHCs and FBOs can have to an unaffiliated company to reduce the risks that may arise from such a counterparty’s sudden failure. In addition to the NPRM, the Fed also issued a white paper (the “White Paper”) that provides the analytical and quantitative reasoning for the Reproposed Rules’ more stringent 15% limit for credit exposures between systemically important financial institutions (“SIFIs”).

The Fed originally proposed single-counterparty credit limits for U.S. BHCs and FBOs in December 2011 and December 2012, respectively (the “Originally Proposed Rules”), the Fed has issued the Reproposed Rules to take into consideration: (1) the extensive comments the Fed received in response to the Originally Proposed Rules; (2) the revised lending limit rules applicable to national banks; (3) the Basel Committee on Banking Supervision’s introduction of large exposures standards; and (4) the results of quantitative impact studies and related analysis conducted by the Fed to gauge the impact of the Originally Proposed Rules.