Board of Governors of the Federal Reserve System

The Economic Growth, Regulatory Relief, and Consumer Protection Act, or EGRRCPA, enacted on May 24, 2018, changed several aspects of banking law to reduce regulatory burden on community banks. EGRRCPA also requires federal banking agencies to further tailor their regulations to reflect the character of the different banking firms that the agencies supervise. Successful implementation of EGRRCPA is an important milestone in the Federal Reserve's ongoing efforts to supervise and regulate the financial industry.

For G-SIBs, which are largely not affected by EGRRCPA, standards remain higher than for smaller firms. For holding companies with more than $250 billion in assets, but below the G-SIB threshold, the Federal Reserve aims to ensure that its regulations are appropriately rigorous given a firm's risk profile and systemic importance.

For firms with total assets greater than $100 billion that are not G-SIBs, the Federal Reserve is revisiting requirements mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and, where appropriate, eliminating or adjusting certain requirements, particularly for firms below $250 billion in total assets. The Federal Reserve has provided relief to less complex firms from supervisory stress testing requirements and the Comprehensive Capital Analysis and Review (CCAR) by effectively moving these firms to an extended stress test cycle for 2019.¹ There are no longer annual supervisory stress testing requirements for firms under $100 billion. Additionally, the Federal Reserve increased from $10 billion to $50 billion the asset threshold requiring a firm to meet risk-committee requirements. Furthermore, banking organizations with less than $10 billion in consolidated total assets, where total trading assets and liabilities are 5 percent or less of total consolidated assets, are no longer subject to the Volcker rule.²

For FBOs, the Federal Reserve recently issued a proposal on the regulatory framework for foreign banks with $100 billion or more in U.S. assets. The proposed regulatory framework would more closely match the rules for foreign banks with the risks they pose to the U.S. financial system. Under the proposed framework, FBOs would be sorted into categories of increasingly stringent requirements based on several factors, including asset size, cross-jurisdictional activity, reliance on short-term wholesale funding, nonbank assets, and off-balance-sheet exposure. The proposed framework for FBOs is substantially the same as the framework proposed last year by the Board for large domestic banks, with some adjustments reflecting structural differences in foreign banks' U.S. operations.

For qualifying community banking organizations, ³ the Federal Reserve and the other federal banking agencies issued a proposal to simplify regulatory capital requirements for these organizations by giving them an option to calculate a simple leverage ratio, rather than multiple measures of capital adequacy.⁴

In December 2018, the Federal Reserve, jointly with the FDIC and the Office of the Comptroller of the Currency (OCC), issued final rules expanding the number of insured depository institutions and U.S. branches and agencies of foreign banks eligible for an 18-month on-site examination cycle, rather than a 12-month cycle.⁵ Further, in December 2018, the agencies issued a proposal to amend their appraisal regulations that would raise the appraisal threshold for residential real estate transactions from $250,000 to $400,000.⁶