• Dodd-Frank Act: Additional Concentration Limits on Large Financial Companies; Federal Reserve Proposes Rules Implementing Dodd-Frank Section 622’s Prohibition on Business Combinations Where the Resulting Financial Company’s Total Consolidated Liabilities Would Exceed 10 Percent of Aggregate U.S. Financial Sector Liabilities
  • June 3, 2014
  • Law Firm: Sullivan Cromwell LLP - New York Office
  • On May 8, 2014, the Board of Governors of the Federal Reserve Board (the “FRB”) issued a notice of proposed rulemaking (the “Proposed Rule”) implementing the financial institutions concentration limit provision in new Section 14 of the Bank Holding Company Act of 1956 (the “BHCA”), which was added to that statute by Section 622 of the Dodd-Frank Act. Section 622 generally prohibits financial companies from consummating business combinations if, after giving effect to the consummation, the total consolidated liabilities of the resulting financial company would exceed 10 percent of the aggregate consolidated liabilities of all financial companies in the United States at the end of the calendar year preceding the transaction. The term “financial company” is defined to include: U.S. insured depository institutions; bank holding companies; savings and loan holding companies; other companies that control insured depository institutions; foreign financial companies that have a U.S. branch or agency or control an insured depository institution in the United States; and non-bank companies designated by the Financial Stability Oversight Council (the “FSOC”) under Section 113 of the Dodd-Frank Act to be regulated by the FRB because of their systemic importance. Of note, this definiton means that most non-depository financial services companies are not included in the the aggregate consolidated liabilities of all financial companies in the United States and that, for example, some insurance companies are defined as financial services companies (and included in the the aggregate consolidated liabilities of all financial companies in the United States), although most are not.