The Dodd-Frank Act builds on prior efforts to limit big-bank market share by expanding prohibited acquisitions so that covered firms may not acquire entities that put their share of U.S. financial liabilities above ten percent. Unlike insured deposits and other liabilities easily ascertained through bank call reports and publicly-available data, “financial liabilities” are a complex concept that poses measurement challenges addressed in the rule through a series of new reporting and related requirements that could be problematic over time to non-bank companies. In the near term, large BHCs will need to confine themselves to organic growth and targeted acquisitions (which may face other FRB obstacles). Large non-banks – regardless of systemic designation – may gain an edge in M&A involving significant liabilities holdings, as could foreign firms exempt from the new restrictions.
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