U.S. ECONOMICS: Federal Reserve Introduces Steps to Limit Bank Mergers

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The Federal Reserve announced on Thursday it has proposed implementing section 622 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which would prohibit a financial company from combining with another company if the ratio of the merged company's liabilities would exceed 10% of the aggregate consolidated liabilities of all financial companies.

The liabilities of a financial institution is defined as the difference between its risk-weighted assets, as adjusted to reflect exposures deducted from regulatory capital, and its total regulatory capital.

Financial 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 (FSOC) for Board supervision.

Although the Section 622 has not yet been implemented, the Fed invites "comments" on the proposed rulemaking.



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