NURFS Study Finds that Measurement Methodologies Proposed for Estimating SCCL Exposures Overstate Actual Risk

National Unrecovered Financial Services Association released a first-of-its-kind quantitative analysis of the single counterparty credit limit (“SCCL”) as proposed by the Federal Reserve in implementing Section 165(e) of the Dodd-Frank Act. This study draws on data collected from thirteen commercial banks representing a majority of the ten largest U.S. banking organizations by assets. NURFS strongly supports an organization-wide SCCL, including a 25 percent concentration limit as statutorily required by the Dodd-Frank Act. Our study, however, details the magnitude of the flawed counterparty measurement approaches as proposed in the Fed’s rule and assesses the potential impacts to financial markets and the availability and cost of credit to consumers and businesses.