Stabilizing Vulnerable Banks Act

Stabilizing Vulnerable Banks Act

This bill increases the oversight of certain nonbank financial companies and bank holding companies by repealing Title IV of the Economic Growth, Regulatory Relief, and Consumer Protection Act (P.L. 115-174). (A nonbank financial company is a financial institution without a banking license that may be subject to supervision due to the company's size or risk profile. A bank holding company owns a controlling interest in one or more banks.)

Specifically, the bill decreases from $250 billion to $50 billion the asset threshold at which enhanced prudential standards become mandatory, thereby requiring more companies to comply with these standards. These standards include stress testing, leverage limits, liquidity requirements, and resolution plan requirements (i.e., living will requirements). Under current law, the Federal Reserve has the discretion to determine the applicability of these standards to bank holding companies with assets between $100 billion and $250 billion.

The bill also expands stress testing by

• increasing the number of board-run stress test scenarios from two to three;
• decreasing the asset threshold at which company-run stress tests are required from $250 billion to $10 billion; and
• requiring company-run stress tests to be performed annually or semiannually, depending on the amount of assets held.

The bill also decreases from $50 billion to $10 billion the asset threshold for mandatory risk committees.

Bill 118 HR 1596, also known as the Stabilizing Vulnerable Banks Act, is a piece of legislation introduced in the US Congress with the aim of addressing the financial stability of banks that are considered vulnerable. The bill seeks to provide support and resources to these banks in order to prevent them from failing and causing potential harm to the overall economy.

The Stabilizing Vulnerable Banks Act includes provisions for the establishment of a fund that would be used to provide financial assistance to banks that are deemed to be at risk of failing. This fund would be managed by a designated government agency and would be used to inject capital into struggling banks, as well as to provide other forms of support such as loan guarantees and restructuring assistance.

In addition to providing financial assistance, the bill also includes measures aimed at increasing oversight and regulation of vulnerable banks in order to prevent future financial crises. This includes requirements for increased reporting and transparency, as well as provisions for closer monitoring of the financial health of these institutions. Overall, the Stabilizing Vulnerable Banks Act is designed to address the issue of financial instability in the banking sector and to prevent the failure of vulnerable banks from causing widespread economic harm. The bill is currently being debated in Congress and has garnered support from both Democrats and Republicans who are concerned about the potential risks posed by failing banks.