---
kind: "section"
citation: "12 U.S.C. § 5325"
title: "12"
title_heading: "Banks and Banking"
number: "5325"
heading: "Enhanced supervision and prudential standards for nonbank financial companies supervised by the Board of Governors and certain bank holding companies"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/5325"
units:
  - "Chapter 53 — Wall Street Reform and Consumer Protection"
  - "Subchapter I — Financial Stability"
  - "Part A — Financial Stability Oversight Council"
---

# §5325. Enhanced supervision and prudential standards for nonbank financial companies supervised by the Board of Governors and certain bank holding companies

- (a) **In general—**
  - (1) **Purpose—** In order to prevent or mitigate risks to the financial stability of the United States that could arise from the material financial distress, failure, or ongoing activities of large, interconnected financial institutions, the [Council](/usc/12/5301.md?p=8) may make recommendations to the [Board of Governors](/usc/12/5301.md?p=3) concerning the establishment and refinement of [prudential standards](/usc/12/5301.md?p=13) and reporting and disclosure requirements applicable to [nonbank financial companies](/usc/12/5311.md?p=a-4-C) supervised by the [Board of Governors](/usc/12/5301.md?p=3) and large, interconnected [bank holding companies](/usc/12/5301.md?p=18-A), that—
    - (A) are more stringent than those applicable to other [nonbank financial companies](/usc/12/5311.md?p=a-4-C) and [bank holding companies](/usc/12/5301.md?p=18-A) that do not present similar risks to the financial stability of the United States; and
    - (B) increase in stringency, based on the considerations identified in [subsection (b)(3)](#b-3).
  - (2) **Recommended application of required standards—** In making recommendations under this section, the [Council](/usc/12/5301.md?p=8) may—
    - (A) differentiate among [companies](/usc/12/5381.md?p=a-5) that are subject to heightened standards on an individual basis or by category, taking into consideration their capital structure, riskiness, complexity, financial activities ([including](/usc/12/5301.md?p=18-A) the financial activities of their [subsidiaries](/usc/12/5301.md?p=18-A)), size, and any other risk-related factors that the [Council](/usc/12/5301.md?p=8) deems appropriate; or
    - (B) recommend an asset threshold that is higher than the applicable threshold for the application of any standard described in subsections [(c)](#c) through [(g)](#g).
- (b) **Development of prudential standards—**
  - (1) **In general—** The recommendations of the [Council](/usc/12/5301.md?p=8) under [subsection (a)](#a) may include—
    - (A) risk-based capital requirements;
    - (B) leverage limits;
    - (C) liquidity requirements;
    - (D) resolution plan and [credit](/usc/12/5481.md?p=7) exposure report requirements;
    - (E) concentration limits;
    - (F) a contingent capital requirement;
    - (G) enhanced public disclosures;
    - (H) short-term debt limits; and
    - (I) overall risk management requirements.
  - (2) **Prudential standards for foreign financial companies—** In making recommendations concerning the standards set forth in [paragraph (1)](#b-1) that would apply to [foreign nonbank financial companies](/usc/12/5311.md?p=a-4-A) supervised by the [Board of Governors](/usc/12/5301.md?p=3) or foreign-based [bank holding companies](/usc/12/5301.md?p=18-A), the [Council](/usc/12/5301.md?p=8) shall—
    - (A) give due regard to the principle of national treatment and equality of competitive opportunity; and
    - (B) take into account the extent to which the [foreign nonbank financial company](/usc/12/5311.md?p=a-4-A) or foreign-based [bank holding company](/usc/12/5301.md?p=18-A) is subject on a consolidated basis to home country standards that are comparable to those applied to [financial companies](/usc/12/5341.md?p=2) in the United States.
  - (3) **Considerations—** In making recommendations concerning [prudential standards](/usc/12/5301.md?p=13) under [paragraph (1)](#b-1), the [Council](/usc/12/5301.md?p=8) shall—
    - (A) take into account differences among [nonbank financial companies](/usc/12/5311.md?p=a-4-C) supervised by the [Board of Governors](/usc/12/5301.md?p=3) and [bank holding companies](/usc/12/5301.md?p=18-A) described in [subsection (a)](#a), based on—
      - (i) the factors described in subsections (a) and (b) of [section 5323 of this title](/usc/12/5323.md);
      - (ii) whether the [company](/usc/12/5381.md?p=a-5) owns an [insured depository institution](/usc/12/5301.md?p=18-A);
      - (iii) nonfinancial activities and affiliations of the [company](/usc/12/5381.md?p=a-5); and
      - (iv) any other factors that the [Council](/usc/12/5301.md?p=8) determines appropriate;
    - (B) to the extent possible, ensure that small changes in the factors listed in subsections (a) and (b) of [section 5323 of this title](/usc/12/5323.md) would not result in sharp, discontinuous changes in the [prudential standards](/usc/12/5301.md?p=13) established under [section 5365 of this title](/usc/12/5365.md); and
    - (C) adapt its recommendations as appropriate in light of any predominant line of business of such [company](/usc/12/5381.md?p=a-5), [including](/usc/12/5301.md?p=18-A) assets under management or other activities for which particular standards may not be appropriate.
- (c) **Contingent capital—**
  - (1) **Study required—** The [Council](/usc/12/5301.md?p=8) shall conduct a study of the feasibility, benefits, costs, and structure of a contingent capital requirement for [nonbank financial companies](/usc/12/5311.md?p=a-4-C) supervised by the [Board of Governors](/usc/12/5301.md?p=3) and [bank holding companies](/usc/12/5301.md?p=18-A) described in [subsection (a)](#a), which study shall include—
    - (A) an evaluation of the degree to which such requirement would enhance the safety and soundness of [companies](/usc/12/5381.md?p=a-5) subject to the requirement, promote the financial stability of the United States, and reduce risks to United States taxpayers;
    - (B) an evaluation of the characteristics and amounts of contingent capital that should be required;
    - (C) an analysis of potential [prudential standards](/usc/12/5301.md?p=13) that should be used to determine whether the contingent capital of a [company](/usc/12/5381.md?p=a-5) would be converted to equity in times of financial stress;
    - (D) an evaluation of the costs to [companies](/usc/12/5381.md?p=a-5), the effects on the structure and operation of [credit](/usc/12/5481.md?p=7) and other financial markets, and other economic effects of requiring contingent capital;
    - (E) an evaluation of the effects of such requirement on the international competitiveness of [companies](/usc/12/5381.md?p=a-5) subject to the requirement and the prospects for international coordination in establishing such requirement; and
    - (F) recommendations for implementing regulations.
  - (2) **Report—** The [Council](/usc/12/5301.md?p=8) shall submit a report to Congress regarding the study required by [paragraph (1)](#c-1) not later than 2 years after July 21, 2010.
  - (3) **Recommendations—**
    - (A) **In general—** Subsequent to submitting a report to Congress under [paragraph (2)](#c-2), the [Council](/usc/12/5301.md?p=8) may make recommendations to the [Board of Governors](/usc/12/5301.md?p=3) to require any [nonbank financial company supervised by the Board of Governors](/usc/12/5311.md?p=a-4-D) and any [bank holding company](/usc/12/5301.md?p=18-A) described in [subsection (a)](#a) to maintain a minimum amount of contingent capital that is convertible to equity in times of financial stress.
    - (B) **Factors to consider—** In making recommendations under this subsection, the [Council](/usc/12/5301.md?p=8) shall consider—
      - (i) an appropriate transition period for implementation of a conversion under this subsection;
      - (ii) the factors described in [subsection (b)(3)](#b-3);
      - (iii) capital requirements applicable to a [nonbank financial company supervised by the Board of Governors](/usc/12/5311.md?p=a-4-D) or a [bank holding company](/usc/12/5301.md?p=18-A) described in [subsection (a)](#a), and [subsidiaries](/usc/12/5301.md?p=18-A) thereof;
      - (iv) results of the study required by [paragraph (1)](#c-1); and
      - (v) any other factor that the [Council](/usc/12/5301.md?p=8) deems appropriate.
- (d) **Resolution plan and credit exposure reports—**
  - (1) **Resolution plan—** The [Council](/usc/12/5301.md?p=8) may make recommendations to the [Board of Governors](/usc/12/5301.md?p=3) concerning the requirement that each [nonbank financial company supervised by the Board of Governors](/usc/12/5311.md?p=a-4-D) and each [bank holding company](/usc/12/5301.md?p=18-A) described in [subsection (a)](#a) report periodically to the [Council](/usc/12/5301.md?p=8), the [Board of Governors](/usc/12/5301.md?p=3), and the [Corporation](/usc/12/5301.md?p=7), the plan of such [company](/usc/12/5381.md?p=a-5) for rapid and orderly resolution in the event of material financial distress or failure.
  - (2) **Credit exposure report—** The [Council](/usc/12/5301.md?p=8) may make recommendations to the [Board of Governors](/usc/12/5301.md?p=3) concerning the advisability of requiring each [nonbank financial company supervised by the Board of Governors](/usc/12/5311.md?p=a-4-D) and [bank holding company](/usc/12/5301.md?p=18-A) described in [subsection (a)](#a) to report periodically to the [Council](/usc/12/5301.md?p=8), the [Board of Governors](/usc/12/5301.md?p=3), and the [Corporation](/usc/12/5301.md?p=7) on—
    - (A) the nature and extent to which the [company](/usc/12/5381.md?p=a-5) has [credit](/usc/12/5481.md?p=7) exposure to other [significant nonbank financial companies](/usc/12/5311.md?p=a-7) and [significant bank holding companies](/usc/12/5311.md?p=a-7); and
    - (B) the nature and extent to which other such [significant nonbank financial companies](/usc/12/5311.md?p=a-7) and [significant bank holding companies](/usc/12/5311.md?p=a-7) have [credit](/usc/12/5481.md?p=7) exposure to that [company](/usc/12/5381.md?p=a-5).
- (e) **Concentration limits—** In order to limit the risks that the failure of any individual [company](/usc/12/5381.md?p=a-5) could pose to [nonbank financial companies](/usc/12/5311.md?p=a-4-C) supervised by the [Board of Governors](/usc/12/5301.md?p=3) or [bank holding companies](/usc/12/5301.md?p=18-A) described in [subsection (a)](#a), the [Council](/usc/12/5301.md?p=8) may make recommendations to the [Board of Governors](/usc/12/5301.md?p=3) to prescribe standards to limit such risks, as set forth in [section 5365 of this title](/usc/12/5365.md).
- (f) **Enhanced public disclosures—** The [Council](/usc/12/5301.md?p=8) may make recommendations to the [Board of Governors](/usc/12/5301.md?p=3) to require periodic public disclosures by [bank holding companies](/usc/12/5301.md?p=18-A) described in [subsection (a)](#a) and by [nonbank financial companies](/usc/12/5311.md?p=a-4-C) supervised by the [Board of Governors](/usc/12/5301.md?p=3), in order to support market evaluation of the risk profile, capital adequacy, and risk management capabilities thereof.
- (g) **Short-term debt limits—** The [Council](/usc/12/5301.md?p=8) may make recommendations to the [Board of Governors](/usc/12/5301.md?p=3) to require short-term debt limits to mitigate the risks that an over-accumulation of such debt could pose to [bank holding companies](/usc/12/5301.md?p=18-A) described in [subsection (a)](#a), [nonbank financial companies](/usc/12/5311.md?p=a-4-C) supervised by the [Board of Governors](/usc/12/5301.md?p=3), or the financial system.

## Source credit

(Pub. L. 111–203, title I, § 115, July 21, 2010, 124 Stat. 1403; Pub. L. 115–174, title IV, § 401(c)(1)(A), May 24, 2018, 132 Stat. 1358.)

## Notes

### Editorial Notes

### Amendments

2018—Subsec. (a)(2)(B). Pub. L. 115–174 substituted “the applicable threshold” for “$50,000,000,000”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2018 Amendment

Except as otherwise provided, amendment by Pub. L. 115–174 effective 18 months after May 24, 2018, see section 401(d) of Pub. L. 115–174, set out as a note under section 5365 of this title.

### Construction of 2018 Amendment

For construction of amendment by Pub. L. 115–174 as applied to certain foreign banking organizations, see section 401(g) of Pub. L. 115–174, set out as a note under section 5365 of this title.