WASHINGTON — The Federal Reserve on Thursday released the final version of its total loss absorbing capacity rule, a measure meant to provide a means of recapitalizing a failed bank if a significant unforeseen shock wipes out a megabank's capital reserves.

The rule, published ahead of a scheduled vote by the board, is among the most important post-crisis requirements yet to be completed, and was widely viewed as among the most likely to be finished before the new administration takes over in January.

Fed Chair Janet Yellen said in her prepared remarks that the rule is a critical means of ensuring that taxpayers will never be on the hook to bail out the largest banks should they face similar circumstances as they did in 2008.

"Simply put, this requirement means taxpayers will be better protected because the largest banks will be required to pre-fund the costs of their own failure," Yellen said. "Today's rule and the many other reforms we have put in place help keep our financial system strong and stable — not for its own sake — but for the sake of the workers, families and businesses who determine the long-run success of our economy."

Fed Gov. Daniel Tarullo, who heads the board's supervisory committee, reiterated his position that TLAC — or something like TLAC — is a critical element to have in regulators' toolkits because there has to be some kind of contingency plan for when a bank's capital is exhausted, no matter how much capital it holds. Without such an assurance, the bank and the public will simply assume that the government will step in if things get too bad, he said.

"If government authorities lack confidence in the prospects for an orderly resolution of such a firm, they will be tempted to look for direct or indirect ways to bail that firm out," Tarullo said. "And if counterparties and investors believe this will happen, then no market discipline will be brought to bear upon them."

The TLAC framework, which applies to U.S.-based global systemically important banks and the intermediate holding companies of foreign-based GSIBs, consists of two basic elements. The first is the TLAC, which itself is comprised of two separate parts: a minimum level of long-term debt and a complimentary level of Tier 1 capital. The second is a stipulation that the TLAC be held by a so-called "clean holding company" — that is, held at the BHC level, and ensuring that the BHC does not hold more than a certain level of other competing obligations.

The final rule differs from the Fed's October 2015 proposal in a few important ways. Under the proposal, debt held according to foreign law or that contained certain acceleration clauses would be ineligible to qualify for the rule's long-term debt requirement. The final rule allows debt with such features that is otherwise eligible and in place by December 31, 2016 to qualify — a "grandfathering" provision that the Fed said in its staff memo "should significantly reduce the burden of complying with the requirements" of the rule. The proposal also had a phase-in period that would stretch out total compliance to 2022, but because of the grandfathering clause, the full phase-in has been shortened to Jan. 1, 2019.

"The grandfather provision in the final rule went a long way toward reducing the amount of additional debt that was estimated the bank would have to raise in order to comply with the rule — from roughly $120 billion under the proposed rule to roughly $70 billion under the final rule."

The proposal also would have had U.S. GSIBs hold minimum TLAC of at least 9.5% of total leverage exposure. The final rule adjusted the leverage minimum down from to 7.5% from 9.5%, but added a 2% capital conservation buffer on top. The proposal estimated the compliance cost at between $680 million and $1.5 billion, but the final rule revised that upper estimate to $2 billion — a reflection of costs the agency became aware of through comment letters, according to Fed officials.

The clean holding company aspects of the rule remain largely unchanged, except that some variations between rules for foreign banks and US-based banks were leveled, reflecting other modifications that put foreign and U.S.-based G-SIBs on a more equal procedural footing.

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