Large Financial Institutions
Large financial institutions generally pose the greatest risk to the financial system as a result of their size, complexity, and interconnectedness. For the Federal Reserve, these institutions fall into two primary categories. The largest, most complex bank holding companies and nonbank financial companies--designated by the Financial Stability Oversight Council for Federal Reserve supervision--are considered the institutions posing the greatest systemic risk to the U.S. economy. The Federal Reserve has significantly heightened its expectations of these institutions. A second category of institutions are those with total consolidated assets of at least $100 billion, which are not considered to be systemically important. Because the distress or failure of an institution in this second category is unlikely to have the same effect on the financial system and broader economy as a systemically important institution, the Federal Reserve does not apply to it the full range of rules that are applied to larger, more complex institutions.
Large Institution Supervision Coordinating Committee (LISCC)
The LISCC coordinates the Federal Reserve’s supervision of domestic bank holding companies and foreign banking organizations that pose elevated risk to U.S. financial stability and other nonbank financial institutions designated as systemically important by the Financial Stability Oversight Council.
The Federal Reserve’s supervisory program for large financial institutions is described in SR letter 12-17, “Consolidated Supervision Framework for Large Financial Institutions.”
The Comprehensive Capital Analysis and Review (CCAR) is an annual exercise conducted by the Federal Reserve to assess whether the largest bank holding companies operating in the United States have sufficient capital to continue operations throughout times of economic and financial stress. CCAR ensures these institutions have robust, forward -looking capital-planning processes that account for their unique risks.
Dodd-Frank Act stress testing (DFAST)--a complementary exercise to CCAR--is a forward-looking component conducted both by the Federal Reserve and those financial companies supervised by the Federal Reserve to help assess whether institutions have sufficient capital to absorb losses and support operations during adverse economic conditions.
Large financial institutions are required to submit resolution plans, or “living wills,” that describe a company's strategy for rapid and orderly resolution in the event of material financial distress.
The Shared National Credit Program assesses credit risk and trends as well as the risk management practices associated with the largest and most complex credits shared by multiple regulated financial institutions.
The Federal Reserve Board collects assessment fees equal to the expenses it estimates are necessary or appropriate for it to supervise and regulate bank holding companies and savings and loan holding companies with $50 billion or more in total consolidated assets and nonbank financial companies designated by the Financial Stability Oversight Council for supervision by the Federal Reserve.