August 22, 2017

US Agencies (FDIC, FED, and OCC) proposed to extend the existing transitional capital treatment for certain regulatory capital deductions and risk-weights. The proposal would simplify the capital rules' treatment of mortgage servicing assets and other items. However, under the current capital rules, the transitional treatment for those items is scheduled to be replaced with a different treatment on January 01, 2018. The extension would apply to banking organizations that are not subject to the Agencies' advanced approaches capital rules. Comments on this proposal will be accepted for 30 days after publication in the Federal Register.

As part of the recent review of regulations under the Economic Growth and Regulatory Paperwork Reduction Act, the US Agencies announced that they are developing a proposal that would simplify the capital rules to reduce regulatory burden, particularly for community banks. The Agencies are proposing to extend the existing transition provisions for a targeted set of items, such as mortgage servicing assets, certain deferred tax assets, investments in the capital instruments of unconsolidated financial institutions, and minority interests. This proposal would prevent implementation of the fully phased-in requirements for these items by banking organizations that are not subject to the advanced approaches capital rules prior to the agencies' consideration of simplification to the capital rules. Firms that are subject to the advanced approaches rules would not be affected by this proposal and would remain subject to the fully phased-in requirements for these exposures beginning on January 01, 2018. The US Agencies anticipate proposing the simplified regulatory capital requirements in the coming months.

 

Related Link: Notice of Proposed Rule (PDF)

Keywords: Americas, United States of America, Banking, Capital Rule Transitions, Capital Requirements, Regulation Q, Proportionality, US Agencies

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