On Saturday, senior regulators and central bankers released an agreement with the Basel Committee on the outlines of systemic regulation for global systemically-important banks (G-SIBs).  It simultaneously sent a draft consultative paper that was not released to the public to the Financial Stability Board (FSB).  If the FSB concurs – as the GHOS expects – the draft will be released for public comment in late July.  Because the paper was not made public, critical decisions – e.g., who would be a G-SIB – are not provided.  However, the release did make clear that the FRB and FDIC had won two key goals:  the G-SIB surcharge will be costly in terms both of quantity (up to three percent) and quality (tangible common).  This report assesses the agreement and its impact on all large banks, not just those likely to be dubbed G-SIBs.  As detailed in this report, numerous questions remain for U.S. banks because of the uncertain interplay between the GHOS agreement and Dodd-Frank systemic-surcharge requirements (see FSM Report SYSTEMIC29), although the FRB should clarify this when a proposal on U.S. systemic standards is released in late July.  FedFin continues to believe that any implicit guarantee afforded named G-SIBs as now too big to fail will not apply in the U.S. as the FDIC finalizes the orderly-liquidation authority (see FSM Reports in the RESOLVE series).

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