The Federal Reserve established the Large Institution Supervision Coordinating Committee (LISCC) Program to coordinate oversight of the largest, most systemically important firms. The goal was to make supervision more forward-looking and consistent across institutions by using multidisciplinary teams and horizontal (cross-firm) reviews.
President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, a wide-ranging response to the 2007–2009 financial crisis. For the Federal Reserve, the law expanded authority over large bank holding companies and created new tools meant to reduce the chance that a major firm’s failure would destabilize the economy.
The Federal Reserve finished its first Comprehensive Capital Analysis and Review (CCAR) for 19 large bank holding companies. CCAR linked banks’ dividend and share buyback plans to whether they could remain well-capitalized under stressful economic conditions, making capital planning a central supervisory focus.
The Federal Reserve and the Office of the Comptroller of the Currency released supervisory guidance on “model risk management,” meaning the risk that flawed or misused models lead to bad decisions. The guidance emphasized strong model validation and “effective challenge,” supporting reforms to stress testing and internal risk measurement.
The Federal Reserve finalized its rule requiring large bank holding companies to submit annual capital plans and supporting stress test analysis. This rule formalized the connection between supervisory stress testing and limits on capital distributions, embedding CCAR-style reviews into ongoing supervision.
The Federal Reserve and FDIC set the process and initial due dates for the first group of resolution plans, commonly called “living wills,” required under Dodd-Frank section 165(d). These plans were meant to show how a large firm could be resolved in bankruptcy without taxpayer support, pushing firms to simplify structures and improve preparedness for failure.
The Federal Reserve strengthened its capital assessment of large firms by finalizing Dodd-Frank Act capital stress testing rules. This helped make stress testing a recurring, rule-based part of supervision rather than a one-time crisis response, and it reinforced the annual cycle connecting stress results to capital planning.
The Federal Reserve released a framework describing how it would supervise large financial institutions on a consolidated basis (looking at the parent company and subsidiaries together). It highlighted horizontal reviews (like CCAR), governance expectations, and the need to address risks that can spread across legal entities inside complex organizations.
The Federal Reserve released supervisory stress test results for major bank holding companies under Dodd-Frank Act stress testing. Public disclosure made the process more transparent to markets and created incentives for firms to improve data, modeling, and controls to withstand severe economic scenarios.
Five agencies, including the Federal Reserve, issued final rules to implement the Volcker Rule’s restrictions on proprietary trading and certain relationships with hedge funds and private equity funds. The rules added new compliance, reporting, and documentation expectations that became part of the supervisory program for large, complex banking organizations.
The Federal Reserve finalized enhanced prudential standards for large U.S. bank holding companies and foreign banking organizations, implementing parts of Dodd-Frank section 165. These standards covered areas such as risk management, liquidity, and stress testing, and they strengthened baseline expectations for the largest firms’ controls and resilience.
The Federal Reserve, FDIC, and OCC adopted a final rule updating how banks calculate the supplementary leverage ratio denominator, to better capture on- and off-balance-sheet exposures. This change aimed to make leverage measures more comparable and harder to “game,” reinforcing post-crisis capital reforms alongside risk-based requirements.
Banking agencies finalized a Liquidity Coverage Ratio rule requiring covered firms to hold high-quality liquid assets sufficient to meet projected net cash outflows over 30 days of stress. The LCR added a clear, quantitative liquidity requirement to complement earlier, more qualitative liquidity supervision and stress testing practices.
The Federal Reserve adopted a rule adding extra risk-based capital surcharges for U.S. global systemically important bank holding companies (G-SIBs). The surcharge was designed to reflect the greater harm a failure could cause and to encourage simpler, less risky structures by increasing capital requirements with systemic footprint.
Federal banking and housing-finance agencies, including the Federal Reserve, issued final rules requiring margin (collateral) for certain non-cleared swaps by covered swap entities. The rule aimed to reduce counterparty credit risk and spillovers from derivatives exposures that can grow quickly during market stress.
The Federal Reserve adopted a final rule requiring the largest U.S. and foreign banks operating in the United States to maintain minimum total loss-absorbing capacity (TLAC) and long-term debt. The requirement was designed to improve “resolvability,” so a failing firm could be recapitalized in resolution with losses borne by investors rather than taxpayers.
Dodd-Frank implementation and Fed supervisory reforms (2010-2016)