Adjusting and Indexing Certain Regulatory Thresholds

<RULE> FEDERAL DEPOSIT INSURANCE CORPORATION <CFR>12 CFR Parts 303, 314, 335, 340, 347, 363, and 380</CFR> <RIN>RIN 3064-AG15</RIN> <SUBJECT>Adjusting and Indexing Certain Regulatory Thresholds</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Federal Deposit Insurance Corporation. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Federal Deposit Insurance Corporation (FDIC) is adopting this final rule to amend certain regulatory thresholds in the FDIC's regulations to reflect inflation. Specifically, this final rule generally updates such thresholds to reflect inflation from the date of initial implementation or the most recent adjustment and provides for future adjustments pursuant to an indexing methodology. The changes set forth in this final rule preserve the level of certain thresholds set forth in the FDIC's regulations in real terms, thereby avoiding the undesirable and unintended outcome where the scope of applicability for a regulatory requirement changes due solely to inflation rather than actual changes in an institution's size, risk profile, or level of complexity. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> <E T="03">Effective date:</E> The final rule is effective January 1, 2026. <E T="03">Applicability dates:</E> An insured depository institution (IDI) need not comply with the applicable 12 CFR part 363 requirements in effect as of December 31, 2025, if the IDI will not be subject to such 12 CFR part 363 requirements under the updated thresholds in effect as of January 1, 2026, as specified in this final rule. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Andrew Carayiannis, Chief, Policy & Risk Analytics Section; Bryan Jonasson, Deputy Chief Accountant; Kimberly Krizanovic, Senior Accounting Policy Analyst; Keith Bergstresser, Senior Policy Analyst; Lauren Brown, Senior Policy and Risk Analyst; Jim Yu, Senior Policy and Disclosure Analyst; Rachel Romm-Nisson, Risk Analytics Specialist, Capital Markets and Accounting Policy Branch, Division of Risk Management Supervision; Christopher Blickley, Counsel, Legal Division; Michelle Mire, Senior Attorney, Legal Division; Robert Meiers, Senior Attorney, Legal Division; Nathan Raygor, Senior Attorney, Legal Division; Ryan Tetrick, Deputy Director, Division of Complex Institution Supervision and Resolution; Alex Greenberg, Assistant Director, Division of Resolutions and Receiverships; <E T="03">capitalmarkets@fdic.gov,</E> (202) 898-6888; Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Table of Contents</HD> <EXTRACT> <FP SOURCE="FP-2">I. Introduction</FP> <FP SOURCE="FP1-2">A. Background</FP> <FP SOURCE="FP1-2">B. Considerations and Policy Objectives for Updating and Indexing Thresholds</FP> <FP SOURCE="FP1-2">C. Overview of the Proposal</FP> <FP SOURCE="FP-2">II. Overview of Comments Received</FP> <FP SOURCE="FP1-2">A. In General</FP> <FP SOURCE="FP1-2">B. Expected Effects</FP> <FP SOURCE="FP1-2">C. Indexing Methodology</FP> <FP SOURCE="FP1-2">D. Effective Date</FP> <FP SOURCE="FP1-2">E. Other Comments</FP> <FP SOURCE="FP-2">III. Final Rule and Discussion of Comments</FP> <FP SOURCE="FP1-2">A. Initial Updates</FP> <FP SOURCE="FP1-2">1. 12 CFR part 303 (Part 303)—Filing Procedures</FP> <FP SOURCE="FP1-2">2. 12 CFR part 335 (Part 335)—Securities of State Nonmember Banks and Savings Associations</FP> <FP SOURCE="FP1-2">3. 12 CFR part 340 (Part 340)—Restrictions on Sale of Assets of a Failed Institution by the Federal Deposit Insurance Corporation</FP> <FP SOURCE="FP1-2">4. 12 CFR part 347 (Part 347)—International Banking</FP> <FP SOURCE="FP1-2">5. 12 CFR part 363 (Part 363)—Annual Independent Audits and Reporting Requirements</FP> <FP SOURCE="FP1-2">i. Background</FP> <FP SOURCE="FP1-2">ii. Overview of Proposed Asset Threshold Updates in Part 363</FP> <FP SOURCE="FP1-2">iii. Comments on Part 363</FP> <FP SOURCE="FP1-2">iv. Response to Comments on Part 363</FP> <FP SOURCE="FP1-2">v. Final Rule</FP> <FP SOURCE="FP1-2">6. 12 CFR part 380 (Part 380)—Orderly Liquidation Authority</FP> <FP SOURCE="FP1-2">7. Additional Thresholds</FP> <FP SOURCE="FP1-2">8. Effective Date of Initial Threshold Updates</FP> <FP SOURCE="FP1-2">9. Alternatives for Threshold Application</FP> <FP SOURCE="FP1-2">B. Indexing Methodology for Future Threshold Adjustments</FP> <FP SOURCE="FP1-2">1. Description of Proposed Methodology</FP> <FP SOURCE="FP1-2">i. Comments on the Proposed Methodology</FP> <FP SOURCE="FP1-2">ii. Response to Comments on the Proposed Methodology</FP> <FP SOURCE="FP1-2">2. Alternatives to the Proposed Indexing Methodology</FP> <FP SOURCE="FP1-2">i. Alternative Measures of Indexing: Other Price Indices</FP> <FP SOURCE="FP1-2">ii. Alternative Measures of Indexing: Gross Domestic Product</FP> <FP SOURCE="FP1-2">ii. Alternative Measures of Indexing: Other Measures</FP> <FP SOURCE="FP1-2">iv. Adjustment Frequency Within the Indexing Methodology</FP> <FP SOURCE="FP1-2">v. Degree of Automation in Indexing</FP> <FP SOURCE="FP1-2">3. Final Rule—Indexing Methodology</FP> <FP SOURCE="FP1-2">i. Indexing Methodology, In General</FP> <FP SOURCE="FP1-2">ii. Effective Date and Timing of Future Adjustments</FP> <FP SOURCE="FP-2">IV. Economic Analysis</FP> <FP SOURCE="FP1-2">A. Expected Scope of Impact</FP> <FP SOURCE="FP1-2">B. Estimates of the Number of Directly Affected Entities</FP> <FP SOURCE="FP1-2">C. Costs and Benefits of the Final Rule</FP> <FP SOURCE="FP1-2">D. Overall Assessment</FP> <FP SOURCE="FP-2">V. Administrative Law Matters</FP> <FP SOURCE="FP1-2">A. Administrative Procedure Act</FP> <FP SOURCE="FP1-2">B. Congressional Review Act</FP> <FP SOURCE="FP1-2">C. Paperwork Reduction Act</FP> <FP SOURCE="FP1-2">D. Regulatory Flexibility Act Analysis</FP> <FP SOURCE="FP1-2">E. Plain Language</FP> <FP SOURCE="FP1-2">F. Riegle Community Development and Regulatory Improvement Act of 1994</FP> <FP SOURCE="FP1-2">G. Executive Orders 12866 and 13563</FP> <FP SOURCE="FP1-2">H. Executive Order 14192</FP> </EXTRACT> <HD SOURCE="HD1">I. Introduction</HD> <HD SOURCE="HD2">A. Background</HD> Various regulations promulgated by the FDIC use thresholds to determine their scope of applicability. The most common threshold is the amount of total on-balance sheet assets of an institution (measured in dollars), which has long served as a proxy for an institution's size. <SU>1</SU> <FTREF/> In some cases, asset-based thresholds are combined with other thresholds to serve as proxies for an institution's risk profile or level of complexity, such as the amount of off-balance sheet exposures or cross-jurisdictional activities. <SU>2</SU> <FTREF/> Combining thresholds in this manner allows for a regulatory framework that is tailored to the risks presented by an individual institution or categories of institutions. <FTREF/> <SU>3</SU> Additionally, while most thresholds set a general level of applicability for a regulation, in some instances, thresholds establish exclusions, provide for optionality, or tailor individual requirements within a broad-based regulation to the varying sizes, risk profiles, and levels of complexity of in-scope institutions. <FTNT> <SU>1</SU>   <E T="03">See, e.g.,</E> 12 CFR 337.12(b) (classifying institutions with less than $3 billion in assets as small for examination cycle purpose); 12 CFR 324.2 (providing definitions for Category II and III FDIC-supervised institutions). </FTNT> <FTNT> <SU>2</SU>   <E T="03">See, e.g.,</E> 12 CFR 329.3. </FTNT> <FTNT> <SU>3</SU>  For example, for large financial institutions with total assets of $100 billion or more, capital and liquidity requirements increase in stringency based on measures of size, cross-jurisdictional activity, weighted short-term wholesale funding, nonbank assets, and off-balance sheet exposure. <E T="03">See</E> 12 CFR 252.5, 12 CFR 238.10. </FTNT> Under the FDIC's regulations, most thresholds are static, with no mechanism for periodic adjustments over time. To change a static threshold, the FDIC must, in general, provide notice and seek comment on any such change before it can be implemented as final. <SU>4</SU> <FTREF/> Certain thresholds within the FDIC's regulations are required by statute and therefore cannot be changed without legislative amendments. <SU>5</SU> <FTREF/> <FTNT> <SU>4</SU>  5 U.S.C. 553(b), (c). </FTNT> <FTNT> <SU>5</SU>   <E T="03">See, e.g.,</E> 12 U.S.C. 5365(i)(2)(A), which generally requires financial companies to conduct periodic stress tests if their total consolidated assets are greater than $250 billion. Pursuant to this statutory language, the FDIC's regulations reiterate this $250 billion threshold at 12 CFR 325.2(c). </FTNT> The FDIC has occasionally revised discretionary regulatory thresholds or established a mechanism within a regulation to allow for adjustments on a periodic basis. For example, 12 CFR part 345, which implements the Community Reinvestment Act, <SU>6</SU> <FTREF/> defines small and intermediate-small banks by reference to asset-size criteria expressed in dollar amounts, which are adjusted annually based on the year-to-year change in inflation through a <E T="04">Federal Register</E> notice. <SU>7</SU> <FTREF/> <FTNT> <SU>6</SU>  12 U.S.C. 2901 <E T="03">et seq.</E> </FTNT> <FTNT> <SU>7</SU>  Specifically, this adjustment corresponds to the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each 12-month period ending in November, with rounding to the nearest million. <E T="03">See</E> Community Reinvestment Act Regulations Asset-Size Thresholds, 89 FR 106480, 106481 (Dec. 30, 2024). </FTNT> <HD SOURCE="HD2 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 184k characters. 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