STOCK MARKET WATCH -- Wednesday, 19 November 2014

[Demeter]

26. Fed Exempts Securitization in Rule on Bank Concentration Limits

http://www.bloomberg.com/news/2014-11-05/fed-exempts-securitization-in-rule-on-bank-concentration-limits.html

The Federal Reserve will let banks continue securitization activities after reaching a new limit barring them from acquisitions that push their market share beyond 10 percent of all financial-company liabilities.

The Fed’s final rule on bank concentration limits is “substantially similar” to a proposal released in May, the central bank said in a statement today. If a financial company reaches the 10 percent threshold set by the Dodd-Frank Act it can’t acquire another company under merchant banking authority, the Fed said.

The rule implements a Dodd-Frank mandate that matches a 10 percent cap that already applies to deposits. The limit is intended to promote financial stability and combat perceptions that some U.S. banks would have to be bailed out in a crisis.

The Financial Stability Oversight Council, a panel of U.S. regulators, said in a 2011 report that the limits will reduce the risks “created by increased concentration arising from mergers, consolidations or acquisitions.”