Title 12, Banks and BankingRelease 119-110

§5366 Early Remediation Requirements

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

Last updated Sep 22, 2026|Official source

Summary

The Federal Reserve Board must write rules, after talking with the Council and the Corporation, so nonbank financial companies it supervises and certain bank holding companies (see section 5365(a)) take early action if they begin to get into financial trouble. The rules do not allow the federal government to give them financial help. The rules must say how to measure a firm's health (things like capital, liquidity, and other forward-looking signs) and require steps that get stricter as the firm's condition worsens. Early steps limit payouts, acquisitions, and fast asset growth. Later steps can include a capital-restoration plan, raising new capital, limits on affiliate transactions, management changes, and selling assets.

Full Legal Text

Title 12, §5366

Banks and Banking, Source: USLM XML via OLRC

(a)In general

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)Purpose of the early remediation requirements

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)Remediation requirements

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

Sep 22, 2026

Release point: 119-110