Title 12 — Banks and BankingRelease 119-73not60

§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 Apr 3, 2026|Official source

Summary

The Board of Governors, working with the Council and the Corporation, must make rules that force early fixes when a nonbank financial company supervised by the Board or a bank holding company described in section 5365(a) shows worsening financial trouble. The rules do not allow the federal government to give financial assistance. The rules must say how to measure a firm's health — such as regulatory capital, liquidity, and other forward-looking signs — and require steps that get tougher as the firm weakens. Early steps can limit capital payouts, acquisitions, and asset growth. Later steps can require a capital-restoration plan, raising capital, limits on affiliate deals, management changes, and asset sales.

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 3, 2026

Release point: 119-73not60