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How The Federal Reserve Assesses Firms' Capital Plan Submissions, Part 3 – Glass & Goldberg | Financing, Property & Bankruptcy Law
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How The Federal Reserve Assesses Firms’ Capital Plan Submissions, Part 3

The qualitative assessment of a firm’s capital plan is based on an absolute assessment of an individual firm’s capital planning practices relative to the Federal Reserve’s expectations as set forth in SR letter 15-18 rather than comparative rankings. Thus, a low ranking is not, in and of itself, a reason for the Fed to object to a capital plan.

After a detailed and extensive review by the national committee, recommendations are formulated by various bodies.

  • DSTs formulate a recommendation regarding whether to object to a firm’s capital plan based on the combined assessment;
  • The LISCC’s Operating Committee comprised of senior staff from across the Federal Reserve System, reviews and presents its own recommendation for each LISCC firm to the director of the Board’s Division of Supervision and Regulation.
  • Reserve Banks responsible for the supervision of large and complex firms that are not LISCC firms make recommendations with regard to those firms.

After review by a separate committee of senior staff, using supervisory findings, the director makes the final recommendations to the Board of Governors, which makes the final decision regarding whether to object to a firm’s capital plan.

Objections on qualitative grounds may arise for reasons including, but not limited to:

  • unresolved material supervisory issues;
  • unsuitable assumptions and analyses underlying a firm’s capital plan; or
  • inadequate governance and internal controls, risk management and risk identification in support of a firm’s capital planning practices.

The attorneys at Glass & Goldberg in California provide high quality, cost-effective legal services, and advice for clients in all aspects of commercial compliance, business litigation, and transactional law. Call us at (818) 888-2220, send an email inquiry to info@glassgoldberg.com or visit us online at glassgoldberg.com to learn more about the firm and to sign up for future newsletters.


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