FED Corrects Errors in Rule Simplifying Capital Calculation for Banks

FED published a notice in the Federal Register to correct two erroneous amendment instructions in the final rule that was published in November 2019; this rule, from November 2019, provided for a simple measure of capital adequacy for certain community banking organizations, under the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act. The corrections become effective from January 01, 2020. Under the final rule, depository institutions and depository institution holding companies that have less than USD 10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio (equal to tier 1 capital divided by average total consolidated assets) of greater than 9%, will be eligible to opt into the community bank leverage ratio, or CBLR, framework.

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