regulatory capital

Agencies Finalize Rule to Reduce the Impact of Large Bank Failures

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On October 20, the federal bank regulatory agencies finalized a rule to limit the impact of the failure of large banking organizations. The final rule requires a more stringent regulatory capital treatment for holdings of total loss-absorbing capacity (TLAC) debt, which is issued by U.S. global systemically important bank holding companies (GSIBs). This is intended to discourage large banking organizations from purchasing such debt and reduce the interconnectedness between large banking organizations. The final rule is effective on April 1, 2021. Release. 

Regulatory Capital Rule: Final Rule

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On November 22, 2017, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation published a final rule continuing the application of certain capital rules due to expire at the end of 2017 (focusing on “transition provisions for the regulatory capital treatment of” certain types of assets), though a proposed rule issued on October 27, 2017 may further update the topics addressed in this final rule. Release.

Joint Agency Guidance on Regulatory Capital Rulemakings

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On November 9, the Fed, the FDIC, and the OCC indicated that they do not expect any of the new proposed regulatory capital rules to take effect on January 1, 2013, as was previously suggested in three notices of proposed rulemakings from June.  These new requirements are in connection with the international Basel III capital agreement that has been scheduled to go into effect on January 1, 2013.  Joint Release.

Fed Report on Credit Ratings

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On July 25, pursuant to Section 939A of the Dodd-Frank Act, the Fed published a report identifying instances in which Fed regulations reference or have requirements regarding credit ratings. The report finds that most references to credit ratings occur in the Fed’s capital requirements for state member banks and bank holding companies, and anticipates the removal of these references upon the implementation of recent Basel III international agreements on regulatory capital. Fed Report.

FDIC Final Rule on Regulatory Capital

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On December 16, the FDIC finalized the regulatory capital rule related to FAS 166 and 167 which provides for: (i) an optional delay and phase-in for up to one year of the effect on risk-based capital and the allowance for lease and loan losses related to the assets that must be consolidated as a result of the accounting change and (ii) an elimination of the risk-based capital exemption for ABCP assets. FDIC Release.