SR 14-9:

Incorporation of Federal Reserve Policies into the Savings and Loan Holding Company Supervision Program



SR 14-9
November 7, 2014



Incorporation of Federal Reserve Policies into the Savings and Loan Holding Company Supervision Program

This letter applies to all savings and loan holding companies, including those with $10 billion or less in total consolidated assets

The attached list identifies Federal Reserve supervisory guidance documents (SR letters) issued prior to July 21, 2011 (the date of transfer of supervision and regulation of savings and loan holding companies (SLHCs) from the former Office of Thrift Supervision (OTS) to the Federal Reserve Board) that are applicable to SLHCs.  The Federal Reserve's determination to apply these SR letters to SLHCs follows an extensive review of its existing guidance documents.  Applying these SR letters to SLHCs is consistent with and part of the Federal Reserve's broader initiative to establish an SLHC supervisory program similar in nature to its long-established supervisory program for bank holding companies (BHCs).

As previously discussed in SR letter 11-11/CA 11-5, "Supervision of Savings and Loan Holding Companies (SLHCs)," the majority of existing Federal Reserve guidance for BHCs is equally relevant to the supervision of SLHCs.  SLHCs should refer to the Federal Reserve's SR letters – and not to OTS documents – for guidance on supervisory expectations.  For SR letters issued after July 21, 2011, SLHCs should refer to a specific SR letter to determine if it applies.  SR letters issued after that date are not included in the attached listing.


Under section 312 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the Board assumed all functions and powers of the OTS relating to the supervision of and rulemaking authority for SLHCs, including their non-depository subsidiaries, effective July 21, 2011.1  In establishing its SLHC supervision program, the Federal Reserve, to the greatest extent possible, considered the unique characteristics of SLHCs in the decision to apply an SR letter to SLHCs.  The identified SR letters address the Federal Reserve supervisory expectations for condition, performance, and activities of SLHCs on a consolidated basis and already form the basis for the Federal Reserve's established risk-based supervision program for BHCs.  As with BHCs, the objective of SLHC supervision is to ensure that a holding company and its non-depository subsidiaries operate in a safe-and-sound manner and in compliance with banking laws. 

The attached list of SR letters augment the Federal Reserve's SLHC supervisory program that is currently in place.  The program is largely based on principles of safety and soundness and the source-of-strength doctrine.  The determination as to whether an SR letter should apply to SLHCs included a consideration of the statutory and regulatory differences between SLHCs and BHCs.  This determination also included consideration of differences in permissible activities and capital regulatory requirements. 

Reasons for the Applicability of an SR Letter to SLHCs

In assessing the applicability of an SR letter to SLHCs, the Federal Reserve considered whether the guidance addressed a statute or regulation and whether SLHCs were subject to the underlying statute or regulation.  For a statute or regulation that did not address SLHCs or a statute that specifically excluded SLHCs, the SR letter will not apply.  For interagency guidance issued for public comment, an SR letter is applicable to SLHCs only if OTS gave notice that the guidance would apply to SLHCs.  In determining whether to apply an SR letter to SLHCs, the following factors were also considered:

  • Consistency with the Federal Reserve's approach to the supervision of BHCs.
  • Similarity of equivalent Federal Reserve guidance to OTS guidance that OTS had applied to SLHCs.
  • Informational-in-nature guidance that an SLHC should consider if a specific function is carried out at the holding company level.

SLHC Supervisory Framework

The SLHC portfolio encompasses small and large, shell and active, non-complex and complex, and geographically diverse SLHCs.  In addition, several of these organizations primarily engage in insurance, broker-dealer, or commercial activities, and, as such, have varying supervision requirements.

As previously discussed in SR letter 11-11/CA 11-5, the Federal Reserve is using its existing BHC RFI ratings framework to assign indicative ratings to SLHCs.  The Federal Reserve continues to evaluate the appropriateness of the RFI ratings framework for all SLHCs.  The supervisory experience gained over the past three years is aiding the Federal Reserve in the development of a ratings framework that is appropriately consistent with the BHC supervision framework and appropriately addresses the range of non-depository activities in which certain SLHCs engage.  Once a proposed ratings framework is developed, the Federal Reserve will provide an opportunity for public comment on the proposed ratings framework.

Interagency Coordination

Federal Reserve examiners are expected to coordinate the SLHC supervisory planning processes and inspection programs with the appropriate primary federal and state regulators for the holding company, depository institution, and any non-depository subsidiary in order to ensure that high-risk areas are appropriately addressed, duplicative efforts are avoided, and knowledge gaps are filled.  The issuance of this letter does not affect the applicability of the guidance issued by the primary federal and state regulators for the depository institution and non‑depository subsidiaries.

Reserve Banks are asked to distribute this letter to appropriate safety-and-soundness examiners and other supervisory staff.  If examiners have questions about the applicability of a particular SR letter not listed in the attachment to SLHCs, they should consult with Board staff.  Questions regarding this letter should be directed to the following:

  • SLHC Supervision section:  Karen Caplan, Manager, at (202) 452-2710; or Angela Knight-Davis, Supervisory Financial Analyst, at (202) 475-6679.
  • Policy Implementation and Effectiveness section:  Virginia Gibbs, Manager, at (202) 452-2521; or Jinai Holmes, Senior Supervisory Financial Analyst, at (202) 452-2834.

In addition, questions may be sent via the Board's public website.2

signed by
Michael S. Gibson
Division of Banking
Supervision and Regulation

Cross References:

SR letter 11-11/CA 11-5, "Supervision of Savings and Loan Holding Companies (SLHCs)"

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Last Update: November 07, 2014