On October 31, 2018, the federal banking agencies released two separate proposals that, if adopted, would create a more consistent tiered approach to large bank supervision – in other words, supervision of banking organizations with at least $100 billion in total consolidated assets. The proposals would establish four categories of standards and apply them to institutions based on the risk they pose to the financial system. The new tiered approach would apply to U.S. banking organizations with respect to the application of (i) the regulatory capital rule; (ii) the liquidity coverage ratio (LCR) rule; (iii) the proposed net stable funding ratio (NSFR) rule; and (iv) certain enhanced prudential standards (EPS) contained in Regulation YY, in particular, standards regarding capital planning requirements, supervisory and company-run stress testing, liquidity risk management, stress testing, and buffer requirements; risk-management and risk committee requirements; and single counterparty credit limits.

The proposal related to the regulatory capital rule, the LCR rule, and the proposed NSFR rule (the “Capital and Liquidity Proposal”) was released jointly by the Office of the Comptroller of the Currency (OCC), the Board of Governors and the Federal Reserve System (“Federal Reserve”), and the Federal Deposit Insurance Corporation (FDIC and, together with the OCC and Federal Reserve, the “Agencies”). The proposal related to EPS (the “EPS Proposal” and, together with the Capital and Liquidity Proposal, the “Tailoring Proposals”) was separately released by the Federal Reserve.