January 04, 2018

FED is requesting comments on the proposed guidance that would clarify its supervisory expectations related to risk management for large financial institutions. Comments on this proposal will be accepted until March 15, 2018. FED previously extended the comment periods for the rating system and board effectiveness guidance until February 15, 2018, so that the public could comment on and understand these components together.

The proposed guidance identifies core principles for effective senior management, who are directly accountable to the firm's board of directors for the day-to-day management of the firm. The core principles include ensuring that the firm manages its risk in a way that is prudent and consistent with its business strategy and risk management capabilities. The proposed guidance also identifies core principles for a firm's business line management and independent risk management. The proposed guidance would apply to large financial institutions, including domestic bank holding companies and savings and loan holding companies with USD 50 billion or more in consolidated assets; foreign banks operating in the United States with USD 50 billion or more in combined U.S. assets; and nonbank financial companies designated by FSOC for supervision by the Board.

The guidance is part of a broader initiative to develop a new rating system for large financial institutions that will align with the post-crisis supervisory program. In August 2017, FED invited comment on the proposed rating system, which would reflect assessments of a firm's capital, liquidity, and governance and controls. Also, in August 2017, FED issued a proposal identifying the attributes of effective boards of directors. The supervisory expectations described in this proposed guidance, as well as those for boards of directors, would help inform the FED's overall supervisory evaluation of a firm's governance and controls.

 

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Comment Due Date: March 15, 2018

Keywords: Americas, US, Banking, Supervisory Expectations, Risk Management, Guidance, FED