The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), and Federal Deposit Insurance Corporation (FDIC) have finalized a rule concerning the treatment of certain debt investments by advanced banking organizations. The rule requires these organizations to deduct from their regulatory capital any investments in unsecured debt instruments issued by systemically important banks, known as GSIBs, to meet specific capacity requirements. This rule aims to reduce interconnectedness and systemic risks within the financial system and includes adjustments following public comments on the proposal. Additionally, the rule incorporates several technical amendments and new definitions to its regulatory framework.
Simple Explanation
The government has made a new rule for big banks to make sure they don't get too tangled up with each other by telling them to be careful about certain kinds of money they put into other big banks, so they all stay safe and strong.