A newly adopted final rule by the Federal Reserve (Fed) will strengthen the government’s ability to resolve the largest domestic and foreign financial institutions operating in the U.S. without any support from taxpayer-provided capital.
The final rule applies to domestic firms the Fed identifies as global systemically important banks (G-SIBs) and to the U.S. operations of foreign G-SIBs. These institutions will be required to meet a new long-term debt requirement and a new “total loss-absorbing capacity” requirement, which can be met with both regulatory capital and long-term debt.
Read on to learn more about the new rule.