On November 6, 2020, the Board of Governors of the Federal Reserve System (the “FRB”) announced that, beginning in 2021, its Large Institution Supervision Coordinating Committee (“LISCC”) supervisory program will apply only to Category I firms as defined in the FRB’s tailoring framework.  This change will have the effect of removing three foreign banking organizations (“FBOs”) with U.S. operations from the LISCC portfolio.  Going forward, only U.S. firms that are designated as global systemically important banks (“U.S. G-SIBs”) will be included in the LISCC portfolio.

The LISCC program is the FRB’s most stringent supervisory program for large and systemically important banks.  LISCC portfolio firms are subject to horizontal reviews with other such firms, and heightened expectations with respect to capital planning and reporting requirements compared to non-LISCC firms.

The FRB’s revision to the scope of the LISCC supervisory program is the latest in a series of actions the FRB has taken to align its supervisory program with the tailoring framework, which was finalized in October 2019.  As we have reported previously, the FRB’s tailoring framework assigns firms into one of four categories depending on their size and activity levels.  The FRB’s recent capital planning proposal, if finalized, would take further steps to align the FRB’s capital planning requirements and guidance with the tailoring framework.