Bank Risk Reduction Act of 2024

The Wall Street Transparency and Accountability Act of 2010 (12 U.S.C. 8301 et seq.) is amended by inserting after section 754 the following:

A covered banking institution—

(1) shall be exempt from any clearing or margin requirements applicable to an interest rate swap that hedges interest rate risk of debt securities or loans held on the balance sheet of the covered banking institution, including any requirements under sections 2(h) or 4s(e) of Commodity Exchange Act and the regulations promulgated thereunder;

(2) may use hedge accounting with respect to debt securities or loans held on the balance sheet of the covered banking institution;

(3) is not subject to any requirement, including the Financial Accounting Standards Board’s Accounting Standard Codification paragraph 815–20–25–43(c)(2), that restricts a covered banking institution from an option to designate a fair value hedge on the risks of changes in the fair value attributable to the interest rate risk of a held-to-maturity debt security; and

(4) is not subject to any requirement, including the Financial Accounting Standards Board’s Accounting Standard Codification paragraph 815–20–25–43(d)(2), that restricts a covered banking institution from an option to designate a cash flow hedge to the risks of changes in the cash flows attributable to interest rate risk that result from variable cash flows of a held-to-maturity debt security.

In this section:

The term covered banking institution means an insured depository institution or depository institution holding company.

With respect to a covered banking institution, the term interest rate swap means a swap entered into by the covered banking institution for the purpose of hedging against the interest rate risk of debt securities or loans held on the balance sheet of the covered banking institution.

The term hedge accounting means the accounting rules and regulations that enable the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements, including the accounting rules and guidance provided by the Financial Accounting Standards Board.

The term fair value means the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The table of contents in section 1(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is amended by inserting after the item relating to section 754 the following: