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The Fed’s Trick-or-Treat on Too Big to Fail 

November 4, 2015

Eugene Grygo, Financial Technology Forums News

Although Halloween has just passed, the U.S. Federal Reserve this past Friday officially proposed a new rule that would in theory prevent big domestic and foreign banks operating in the United States from relying on “extraordinary government support or taxpayer assistance.”

In other words, the Fed is taking on firms that are “Too Big to Fail,” a frightening act for which there is no costume yet. (The 45-page PDF of the proposal is scary enough.)

By the way, the proposal is “pursuant to section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and related deduction requirements for all banking organizations subject to the Board’s capital rules,” according to Fed officials.

The Fed would apply the proposed rule to “global systemically important banks (GSIBs) and to the U.S. operations of foreign GSIBs,” according to Fed officials.

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