Regulators propose stricter rules for regional banks, including changes to 'living wills' and debt levels

Federal financial regulators, including the Federal Reserve, FDIC, and Office of the Comptroller of the Currency, have proposed new rules for larger banks' "living wills" and long-term debt holdings in response to the recent regional banking crisis. One proposal requires banks with $100 billion or more in assets to maintain a layer of long-term debt to enhance financial stability and facilitate the resolution of potential failures. The second proposal revises guidance for bank holding companies and foreign banks with over $250 billion in assets, focusing on areas of vulnerability in capital, liquidity, and operational capabilities. The proposals have received mixed reviews from industry trade groups, with the American Bankers Association opposing the rules and the Independent Community Bankers Association supporting the long-term debt requirement. Public comments on the proposals are due by November 30, 2023.