Large Financial Institutions
Large financial institutions include U.S. firms with assets of $100 billion or more and foreign banking organizations with combined U.S. assets of $100 billion or more. Supervision of large financial institutions is designed to: (i) enhance the resiliency of these firms, in order to lower probability of failure or inability to serve as a financial intermediary, and (ii) to reduce the impact on the financial system and the broader economy in the event of a firm's failure or material weakness. The Federal Reserve's supervision framework for large financial institutions is described in SR letter 12-17/CA Letter 12-14, "Consolidated Supervision Framework for Large Financial Institutions".
The Federal Reserve follows a risk-focused approach by scaling its supervisory work to the size and complexity of an institution. In supervising financial institutions, a risk-focused approach to supervision is more efficient and results in more rigorous oversight of firms that pose increased risk to the financial system. The Federal Reserve organizes its supervision of large financial institutions into two supervisory programs, described below.
Large Institution Supervision Coordinating Committee (LISCC) Supervisory Program
Firms identified as posing elevated risk to U.S. financial stability are supervised by the Large Institution Supervision Coordinating Committee, or LISCC, supervisory program. Financial institutions subject to the LISCC supervisory program include: (i) any firm subject to Category I standards under the Board's tailoring framework, (ii) any non-commercial, non-insurance savings and loan holding company that would be identified for Category I standards if it were a bank holding company, and (iii) any nonbank financial institutions designated as systemically important by the Financial Stability Oversight Council (FSOC).
The LISCC supervisory program is a national program that uses both cross-firm (horizontal) and firm-specific supervisory activities to assess the financial resiliency and risk-management practices of firms. For more information on the LISCC supervisory program, see this link.
Large and Foreign Banking Organization (LFBO) Supervisory Program
The Large and Foreign Banking Organization, or LFBO, program supervises all other large financial institutions that are not included in the LISCC program. The LFBO program includes some cross-firm supervisory activities, but firm-specific teams at the local Reserve Bank conduct most of the supervisory work, subject to oversight by the Board. For more information on the LFBO supervisory program for domestic financial institutions, see this link. For more information on the LFBO supervisory program for foreign financial institutions, see this link.
Many large financial institutions are subject to the Board's stress test and capital planning programs, including the Comprehensive Capital Analysis and Review and Dodd-Frank Act stress testing.
Many large financial institutions are required to submit resolution plans, or "living wills," that describe a company's strategy for rapid and orderly resolution in the event of material financial distress.
The Shared National Credit Program assesses credit risk and trends as well as the risk management practices associated with the largest and most complex credits shared by multiple regulated financial institutions.
The Federal Reserve Board collects assessment fees equal to the expenses it estimates are necessary or appropriate for it to supervise and regulate bank holding companies and savings and loan holding companies with $100 billion or more in total consolidated assets and nonbank financial companies designated by the Financial Stability Oversight Council (FSOC) for supervision by the Federal Reserve.