Fed's Yellen: Long-Awaited Batch of Dodd-Frank Rules Due Out Soon

WASHINGTON — Federal Reserve Board Vice Chairman Janet Yellen said Friday the central bank will soon issue a long-awaited package of proposed rules implementing the Dodd-Frank Act.

"The Federal Reserve will soon release for comment its proposed rule on enhanced prudential standards that would apply to large bank holding companies and systemically important nonbank financial firms," Yellen said in prepared remarks at a conference hosted by the Federal Reserve Bank of Chicago. "Efforts to develop these rules have been progressing well."

The rules, which implement Section 165 of the regulatory reform law, cover some of the biggest issues in financial services, including risk-based capital requirements, leverage, resolution planning and concentration limits.

They are considered by some to be the core of Dodd-Frank. The rules had been previously expected to be released in September, but have been delayed for months given the importance of the regulations.

It has been estimated the set of rules released by the Fed could range from 1,000 to 2,000 pages.

The proposals will detail how the Fed plans to regulate large, interconnected financial institutions — as well as non-banks — for the first time. They will also provide clarity on whether such firms will face an added capital surcharge and how regulators plan to unwind systemically important companies if they fail.

In October, the Fed put out for comment a proposed rule for designating nonbank financial firms.

"Because the material distress or failure of a SIFI can have outsized effects on the financial sector and the real economy, the Dodd-Frank Act empowers the Federal Reserve to reduce the probability of such events through tougher prudential standards, including enhanced risk-based capital and leverage requirements, liquidity requirements, an early remediation regime, and restrictions on activities," said Yellen.

Yellen, the Fed's No. 2, stressed the Fed has been "attentive" to coordinating rules required by Dodd-Frank with higher capital standards and new liquidity standards for large banks under the Basel III rules.

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