Joint Release
Board of Governors Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Office of Thrift Supervision
For Imme diate Release August 10, 2010
Agencies Issue Advance Notice of Proposed Rulemaking Regarding
Alternatives to the Use of Credit Ratings in the Regulatory Capital Guidelines
The federal banking agencies (agencies) today have agreed to publish an advance
notice of proposed rulemaking (advance notice) regarding alternatives to the use of
credit ratings in their risk-based capital rules (capital rules) for banking organizations.
The advance notice is issued in response to section 939A of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Act), enacted on July 21, 2010, which
requires the agencies to review regulations that (1) require an assessment of the credit-
worthiness of a security or money market instrument and (2) contain references to or
requirements regarding credit ratings. In addition, the agencies are required to remove
such references and requirements and substitute in their place uniform standards of
credit-worthiness, where feasible.
Through this advance notice, the agencies are seeking to gather information as they
begin to develop alternatives to the use of credit ratings in their capital rules. This
advance notice describes the areas in these capital rules where the agencies rely on
credit ratings, as well as the Basel Committee on Banking Supervision’s recent
amendments to the Basel Accord. The advance notice solicits comment on alternative
standards of creditworthiness that could be used in lieu of credit ratings. It requests
comment on a set of criteria the agencies believe are important in evaluating
creditworthiness standards, including risk sensitivity, transparency, consistency, and
simplicity. It asks for comment on a range of potential approaches, including basing
capital requirements on more granular supervisory risk weights or on market-based
metrics, as well as on how these approaches might apply to different exposure
categories. It also seeks comment on the feasibility of and burden associated with
alternative methods of measuring creditworthiness for banking organizations of varying
size and complexity.
The advance notice addresses only the references to credit ratings in the agencies’
capital rules. It is expected that proposals for removing references to credit ratings in
other parts of their regulations will follow separately.
The advance notice, issued by the Office of the Comptroller of the Currency, Board of
Governors of the Federal Reserve System, and the Federal Deposit Insurance
Corporation, solicits comment for 60 days after publication in the Federal Register,
which is expected shortly. The Office of Thrift Supervision plans to join the other federal
banking agencies in issuing this advance notice pending clearance by the Office of
Management and Budget.
# # #
Board of Governors Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Office of Thrift Supervision
For Imme diate Release August 10, 2010
Agencies Issue Advance Notice of Proposed Rulemaking Regarding
Alternatives to the Use of Credit Ratings in the Regulatory Capital Guidelines
The federal banking agencies (agencies) today have agreed to publish an advance
notice of proposed rulemaking (advance notice) regarding alternatives to the use of
credit ratings in their risk-based capital rules (capital rules) for banking organizations.
The advance notice is issued in response to section 939A of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Act), enacted on July 21, 2010, which
requires the agencies to review regulations that (1) require an assessment of the credit-
worthiness of a security or money market instrument and (2) contain references to or
requirements regarding credit ratings. In addition, the agencies are required to remove
such references and requirements and substitute in their place uniform standards of
credit-worthiness, where feasible.
Through this advance notice, the agencies are seeking to gather information as they
begin to develop alternatives to the use of credit ratings in their capital rules. This
advance notice describes the areas in these capital rules where the agencies rely on
credit ratings, as well as the Basel Committee on Banking Supervision’s recent
amendments to the Basel Accord. The advance notice solicits comment on alternative
standards of creditworthiness that could be used in lieu of credit ratings. It requests
comment on a set of criteria the agencies believe are important in evaluating
creditworthiness standards, including risk sensitivity, transparency, consistency, and
simplicity. It asks for comment on a range of potential approaches, including basing
capital requirements on more granular supervisory risk weights or on market-based
metrics, as well as on how these approaches might apply to different exposure
categories. It also seeks comment on the feasibility of and burden associated with
alternative methods of measuring creditworthiness for banking organizations of varying
size and complexity.
The advance notice addresses only the references to credit ratings in the agencies’
capital rules. It is expected that proposals for removing references to credit ratings in
other parts of their regulations will follow separately.
The advance notice, issued by the Office of the Comptroller of the Currency, Board of
Governors of the Federal Reserve System, and the Federal Deposit Insurance
Corporation, solicits comment for 60 days after publication in the Federal Register,
which is expected shortly. The Office of Thrift Supervision plans to join the other federal
banking agencies in issuing this advance notice pending clearance by the Office of
Management and Budget.
# # #
Attachment:
Advanced Notice of Proposed Rulemaking Regarding Alternatives to the Use of Credit
Ratings in the Regulatory Capital Guidelines of the Federal Banking Agencies -
PDF (PDF Help)
Statement by FDIC Chairman Sheila C. Bair
Media Contacts:
Federal Reserve Barbara Hagenbaugh (202) 452-2955
OCC Dean DeBuck (202) 874-5770
FDIC David Barr (202) 898-6992
OTS William Ruberry (202) 906-6677
FDIC: PR-185-2010
Advanced Notice of Proposed Rulemaking Regarding Alternatives to the Use of Credit
Ratings in the Regulatory Capital Guidelines of the Federal Banking Agencies -
PDF (PDF Help)
Statement by FDIC Chairman Sheila C. Bair
Media Contacts:
Federal Reserve Barbara Hagenbaugh (202) 452-2955
OCC Dean DeBuck (202) 874-5770
FDIC David Barr (202) 898-6992
OTS William Ruberry (202) 906-6677
FDIC: PR-185-2010