Fed approves financial company definition

The new rule clarifies that standard to mean a company with at least 85 percent of its revenues or assets, and those of its subsidiaries, related to activities that are financial in nature.

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Activities that are "financial in nature" are defined by the 1996 Bank Holding Company Act, which covers lending, exchanging, investing or safeguarding assets, providing a device to do so, or arranging transactions for a third party.

The new rule also defines a "significant" financial or bank holding company as one with $50 billion or more in total consolidated assets or one designated by the FSOC as important, as directed by the Dodd-Frank law.

The rule will become effective May 6.