Federal Reserve Re-proposes Single-Counterparty Credit Limits for US and Non-US Banking Organizations
24 March 2016
Mayer Brown Legal Update
The US Federal Reserve has re-proposed a rule to implement the single-counterparty credit limits (SCCL) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This rule would impose limits on the aggregate amount of credit exposure that any US bank holding company, US intermediate holding company or foreign banking organization with $50 billion or more in total consolidated assets (a covered company) may have with an unaffiliated counterparty. Commenters criticized the earlier SCCL proposals, issued in 2011 and 2012, for being insufficiently sensitive to the risks associated with particular types of credit exposures, and therefore for being overbroad in their impact. The revised proposal, while still complex and likely to produce significant compliance burdens, incorporates several helpful modifications to the earlier proposals and potentially opens the door to further liberalizations by requesting comment on several key issues.