Title 12 — Banks and BankingRelease 119-73

§5366 Early remediation requirements

Title 12 › Chapter CHAPTER 53— - WALL STREET REFORM AND CONSUMER PROTECTION › Subchapter SUBCHAPTER I— - FINANCIAL STABILITY › Part Part C— - Additional Board of Governors Authority for Certain Nonbank Financial Companies and Bank Holding Companies › § 5366

Last updated Apr 6, 2026|Official source

Summary

The Federal Reserve Board, after consulting the Financial Stability Oversight Council and the FDIC, must write rules that force early fixes when large nonbank financial firms it supervises or certain bank holding companies start having money problems. The rules do not let the federal government give those firms financial help. The rules must say how to measure a firm's health, using things like capital, liquidity, and other warning signs. They must require steps that get tougher as the firm weakens — early limits on payouts, buying other companies, and growth; later actions like a plan to restore capital, raising money, limits on deals with related companies, management changes, and selling assets.

Full Legal Text

Title 12, §5366

Banks and Banking — Source: USLM XML via OLRC

(a)The Board of Governors, in consultation with the Council and the Corporation, shall prescribe regulations establishing requirements to provide for the early remediation of financial distress of a nonbank financial company supervised by the Board of Governors or a bank holding company described in section 5365(a) of this title, except that nothing in this subsection authorizes the provision of financial assistance from the Federal Government.

(b)The purpose of the early remediation requirements under subsection (a) shall be to establish a series of specific remedial actions to be taken by a nonbank financial company supervised by the Board of Governors or a bank holding company described in section 5365(a) of this title that is experiencing increasing financial distress, in order to minimize the probability that the company will become insolvent and the potential harm of such insolvency to the financial stability of the United States.

(c)The regulations prescribed by the Board of Governors under subsection (a) shall—

(1)define measures of the financial condition of the company, including regulatory capital, liquidity measures, and other forward-looking indicators; and

(2)establish requirements that increase in stringency as the financial condition of the company declines, including—

(A)requirements in the initial stages of financial decline, including limits on capital distributions, acquisitions, and asset growth; and

(B)requirements at later stages of financial decline, including a capital restoration plan and capital-raising requirements, limits on transactions with affiliates, management changes, and asset sales.

Reference

Citations & Metadata

Citation

12 U.S.C. § 5366

Title 12 — Banks and Banking

Last Updated

Apr 6, 2026

Release point: 119-73