Fed revises Bank Holding Company Supervision Manual
The Federal Reserve Board recently updated sections of the Bank Holding Company Supervision Manual. (Changes to the manual were last made in November 2021.) The manual provides guidance for conducting inspections of bank holding companies and their nonbank subsidiaries, as well as savings and loan holding companies. “The supervisory objectives of the inspection program are to ascertain whether the financial strength of the bank holding company is being maintained on an ongoing basis and to determine the effects or consequences of transactions between a holding company or its nonbanking subsidiaries and its subsidiary banks,” the Fed explained. Included among the changes are updates to sections on the supervision of savings and loan holdings companies; supervision of holding companies with less than $10 billion in total consolidated assets; liquidity planning and positions applicable to large financial institutions; holding company ratings applicability and inspection frequency; supervision of subsidiaries related to nondeposit investment products; control and ownership of bank holding company formations; asset securitization risk management and internal controls; retail-credit classification; supervision of savings and loan holding companies; and Bank Holding Company Act exemptions. A new section—“Formal Corrective Actions”—revises previous guidance to include entities against which the Fed has statutory authority to take formal enforcement actions. The section also provides additional information on enforcement actions for Bank Secrecy Act and anti-money laundering compliance failures, as well as details on interagency enforcement coordination. The section further clarifies that the Fed “does not issue an enforcement action on the basis of a ‘violation’ of or ‘non-compliance’ with supervisory guidance.” Minor technical changes were made throughout the manual as well. A detailed summary of changes is available here.