This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Proposed Rules Federal Register
82317
Vol. 75, No. 250
Thursday, December 30, 2010
1 12 CFR part 3, Appendix C (OCC); 12 CFR part
208, Appendix F and 12 CFR part 225, Appendix
G (Board); and 12 CFR part 325 Appendix D (FDIC).
2 Public Law 111–203, § 171, 124 Stat. 1376,
1435–38 (2010).
3 12 CFR part 3, Appendix A (OCC); 12 CFR parts
208 and 225, Appendix A (Board); 12 CFR part 325,
Appendix A (FDIC).
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 3
[Docket No. OCC–2010–0009]
RIN 1557–AD33
FEDERAL RESERVE SYSTEM
12 CFR Parts 208 and 225
[Regulations H and Y; Docket No. R–1402]
RIN 7100–AD62
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 325
RIN 3064–AD58
Risk-Based Capital Standards:
Advanced Capital Adequacy
Framework—Basel II; Establishment of
a Risk-Based Capital Floor
AGENCY: Office of the Comptroller of the
Currency, Treasury; Board of Governors
of the Federal Reserve System; and the
Federal Deposit Insurance Corporation.
ACTION: Joint notice of proposed
rulemaking.
SUMMARY: The Office of the Comptroller
of the Currency (OCC), Board of
Governors of the Federal Reserve
System (Board), and the Federal Deposit
Insurance Corporation (FDIC)
(collectively, the agencies) propose to:
Amend the advanced risk-based capital
adequacy standards (advanced
approaches rules) 1 to be consistent with
certain provisions of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (the Act) 2 and amend the
general risk-based capital rules 3 to
provide limited flexibility consistent
with section 171(b) of the Act for
recognizing the relative risk of certain
assets generally not held by depository
institutions.
DATES: Comments on this notice of
proposed rulemaking must be received
by February 28, 2011.
ADDRESSES: Comments should be
directed to:
OCC: Because paper mail in the
Washington, DC area and at the
Agencies is subject to delay,
commenters are encouraged to submit
comments by the Federal eRulemaking
Portal or e-mail, if possible. Please use
the title ‘‘Advanced Capital Adequacy
Framework—Basel II; Establishment of a
Risk-Based Capital Floor’’ to facilitate
the organization and distribution of the
comments. You may submit comments
by any of the following methods:
• Federal eRulemaking Portal—
‘‘regulations.gov’’: Go to http://
www.regulations.gov. Select ‘‘Document
Type’’ of ‘‘Proposed Rules,’’ and in
‘‘Enter Keyword or ID Box,’’ enter Docket
ID ‘‘OCC–2010–0009,’’ and click
‘‘Search.’’ On ‘‘View By Relevance’’ tab at
bottom of screen, in the ‘‘Agency’’
column, locate the proposed rule for
OCC, in the ‘‘Action’’ column, click on
‘‘Submit a Comment’’ or ‘‘Open Docket
Folder’’ to submit or view public
comments and to view supporting and
related materials for this rulemaking
action.
• Click on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov,
including instructions for submitting or
viewing public comments, viewing
other supporting and related materials,
and viewing the docket after the close
of the comment period.
• E-mail:
regs.comments@occ.treas.gov.
• Mail: Office of the Comptroller of
the Currency, 250 E Street, SW., Mail
Stop 2–3, Washington, DC 20219.
• Fax: (202) 874–5274.
• Hand Delivery/Courier: 250 E
Street, SW., Mail Stop 2–3, Washington,
DC 20219.
Instructions: You must include ‘‘OCC’’
as the agency name and ‘‘Docket ID
OCC–2010–0009’’ in your comment. In
general, OCC will enter all comments
received into the docket and publish
them on the Regulations.gov Web site
without change, including any business
or personal information that you
provide such as name and address
information, e-mail addresses, or phone
numbers. Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
enclose any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may review comments and other
related materials that pertain to this
proposed rule by any of the following
methods:
• Viewing Comments Electronically:
Go to http://www.regulations.gov. Select
‘‘Document Type’’ of ‘‘Public
Submissions,’’ in ‘‘Enter Keyword or ID
Box,’’ enter Docket ID ‘‘OCC–2010–
0009,’’ and click ‘‘Search.’’ Comments
will be listed under ‘‘View By
Relevance’’ tab at bottom of screen. If
comments from more than one agency
are listed, the ‘‘Agency’’ column will
indicate which comments were received
by the OCC.
• Viewing Comments Personally: You
may personally inspect and photocopy
comments at the OCC, 250 E Street,
SW., Washington, DC. For security
reasons, the OCC requires that visitors
make an appointment to inspect
comments. You may do so by calling
(202) 874–4700. Upon arrival, visitors
will be required to present valid
government-issued photo identification
and to submit to security screening in
order to inspect and photocopy
comments.
• Docket: You may also view or
request available background
documents and project summaries using
the methods described above.
Board: You may submit comments,
identified by Docket No. R–1402 and
RIN No. 7100–AD62, by any of the
following methods:
• Agency Web Site: http://
www.federalreserve.gov. Follow the
instructions for submitting comments at
http://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail:
regs.comments@federalreserve.gov.
Include docket number in the subject
line of the message.
VerDate Mar<15>2010 17:52 Dec 29, 2010 Jkt 223001 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\30DEP1.SGM 30DEP1
srobinson on DSKHWCL6B1PROD with PROPOSALS
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Proposed Rules Federal Register
82317
Vol. 75, No. 250
Thursday, December 30, 2010
1 12 CFR part 3, Appendix C (OCC); 12 CFR part
208, Appendix F and 12 CFR part 225, Appendix
G (Board); and 12 CFR part 325 Appendix D (FDIC).
2 Public Law 111–203, § 171, 124 Stat. 1376,
1435–38 (2010).
3 12 CFR part 3, Appendix A (OCC); 12 CFR parts
208 and 225, Appendix A (Board); 12 CFR part 325,
Appendix A (FDIC).
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 3
[Docket No. OCC–2010–0009]
RIN 1557–AD33
FEDERAL RESERVE SYSTEM
12 CFR Parts 208 and 225
[Regulations H and Y; Docket No. R–1402]
RIN 7100–AD62
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 325
RIN 3064–AD58
Risk-Based Capital Standards:
Advanced Capital Adequacy
Framework—Basel II; Establishment of
a Risk-Based Capital Floor
AGENCY: Office of the Comptroller of the
Currency, Treasury; Board of Governors
of the Federal Reserve System; and the
Federal Deposit Insurance Corporation.
ACTION: Joint notice of proposed
rulemaking.
SUMMARY: The Office of the Comptroller
of the Currency (OCC), Board of
Governors of the Federal Reserve
System (Board), and the Federal Deposit
Insurance Corporation (FDIC)
(collectively, the agencies) propose to:
Amend the advanced risk-based capital
adequacy standards (advanced
approaches rules) 1 to be consistent with
certain provisions of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (the Act) 2 and amend the
general risk-based capital rules 3 to
provide limited flexibility consistent
with section 171(b) of the Act for
recognizing the relative risk of certain
assets generally not held by depository
institutions.
DATES: Comments on this notice of
proposed rulemaking must be received
by February 28, 2011.
ADDRESSES: Comments should be
directed to:
OCC: Because paper mail in the
Washington, DC area and at the
Agencies is subject to delay,
commenters are encouraged to submit
comments by the Federal eRulemaking
Portal or e-mail, if possible. Please use
the title ‘‘Advanced Capital Adequacy
Framework—Basel II; Establishment of a
Risk-Based Capital Floor’’ to facilitate
the organization and distribution of the
comments. You may submit comments
by any of the following methods:
• Federal eRulemaking Portal—
‘‘regulations.gov’’: Go to http://
www.regulations.gov. Select ‘‘Document
Type’’ of ‘‘Proposed Rules,’’ and in
‘‘Enter Keyword or ID Box,’’ enter Docket
ID ‘‘OCC–2010–0009,’’ and click
‘‘Search.’’ On ‘‘View By Relevance’’ tab at
bottom of screen, in the ‘‘Agency’’
column, locate the proposed rule for
OCC, in the ‘‘Action’’ column, click on
‘‘Submit a Comment’’ or ‘‘Open Docket
Folder’’ to submit or view public
comments and to view supporting and
related materials for this rulemaking
action.
• Click on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov,
including instructions for submitting or
viewing public comments, viewing
other supporting and related materials,
and viewing the docket after the close
of the comment period.
• E-mail:
regs.comments@occ.treas.gov.
• Mail: Office of the Comptroller of
the Currency, 250 E Street, SW., Mail
Stop 2–3, Washington, DC 20219.
• Fax: (202) 874–5274.
• Hand Delivery/Courier: 250 E
Street, SW., Mail Stop 2–3, Washington,
DC 20219.
Instructions: You must include ‘‘OCC’’
as the agency name and ‘‘Docket ID
OCC–2010–0009’’ in your comment. In
general, OCC will enter all comments
received into the docket and publish
them on the Regulations.gov Web site
without change, including any business
or personal information that you
provide such as name and address
information, e-mail addresses, or phone
numbers. Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
enclose any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may review comments and other
related materials that pertain to this
proposed rule by any of the following
methods:
• Viewing Comments Electronically:
Go to http://www.regulations.gov. Select
‘‘Document Type’’ of ‘‘Public
Submissions,’’ in ‘‘Enter Keyword or ID
Box,’’ enter Docket ID ‘‘OCC–2010–
0009,’’ and click ‘‘Search.’’ Comments
will be listed under ‘‘View By
Relevance’’ tab at bottom of screen. If
comments from more than one agency
are listed, the ‘‘Agency’’ column will
indicate which comments were received
by the OCC.
• Viewing Comments Personally: You
may personally inspect and photocopy
comments at the OCC, 250 E Street,
SW., Washington, DC. For security
reasons, the OCC requires that visitors
make an appointment to inspect
comments. You may do so by calling
(202) 874–4700. Upon arrival, visitors
will be required to present valid
government-issued photo identification
and to submit to security screening in
order to inspect and photocopy
comments.
• Docket: You may also view or
request available background
documents and project summaries using
the methods described above.
Board: You may submit comments,
identified by Docket No. R–1402 and
RIN No. 7100–AD62, by any of the
following methods:
• Agency Web Site: http://
www.federalreserve.gov. Follow the
instructions for submitting comments at
http://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail:
regs.comments@federalreserve.gov.
Include docket number in the subject
line of the message.
VerDate Mar<15>2010 17:52 Dec 29, 2010 Jkt 223001 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\30DEP1.SGM 30DEP1
srobinson on DSKHWCL6B1PROD with PROPOSALS
82318 Federal Register / Vol. 75, No. 250 / Thursday, December 30, 2010 / Proposed Rules
4 Public Law 111–203, § 171, 124 Stat. 1376,
1435–38 (2010).
5 Even though the Office of Thrift Supervision
(OTS) is not issuing this notice of proposed
rulemaking (NPR), OTS plans to issue an NPR that
parallels the substance of this notice to amend its
capital regulations at 12 CFR part 567. OTS’s
parallel notice is subject to review by the Office of
Management and Budget pursuant to Executive
Order 12866.
6 72 FR 69288 (December 7, 2007). Subject to
prior supervisory approval, other banking
organizations can opt to use the advanced
approaches rules. See 72 FR 69397 (December 7,
2007).
7 The BCBS is a committee of banking supervisory
authorities established by the central bank
governors of the G–10 countries in 1975. The BCBS
issued the New Accord to modernize its first capital
Accord, which was endorsed by the BCBS members
in 1988 and implemented by the agencies in 1989.
The New Accord, the 1988 Accord, and other
documents issued by the BCBS are available
through the Bank for International Settlements’ Web
site at http://www.bis.org.
8 12 CFR part 3, Appendix A (OCC); 12 CFR parts
208 and 225, Appendix A (Board); and 12 CFR part
325, appendix A (FDIC).
9 Under the advanced approaches rules, the
minimum tier 1 risk-based capital requirement is 4
percent and the total risk-based capital requirement
is 8 percent. See 12 CFR part 3, Appendix C (OCC);
12 CFR part 208, Appendix F and 12 CFR part 225,
Appendix G (Board); and 12 CFR part 325
Appendix D (FDIC).
• FAX: (202) 452–3819 or (202) 452–
3102.
• Mail: Jennifer J. Johnson, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
DC 20551.
All public comments are available
from the Board’s Web site at http://
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper form in Room MP–500 of the
Board’s Martin Building (20th and C
Streets, NW.) between 9 a.m. and 5 p.m.
on weekdays.
FDIC: You may submit by any of the
following methods:
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• Agency Web site: http://
www.FDIC.gov/regulations/laws/
federal/propose.html.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments/Legal
ESS, Federal Deposit Insurance
Corporation, 550 17th Street, NW.,
Washington, DC 20429.
• Hand Delivered/Courier: The guard
station at the rear of the 550 17th Street
Building (located on F Street), on
business days between 7 a.m. and 5 p.m.
• E-mail: comments@FDIC.gov.
Instructions: Submissions received
must include ‘‘FDIC’’ and ‘‘PIN XXXX–
XXXX.’’ Comments received will be
posted without change to http://
www.FDIC.gov/regulations/laws/
federal/propose.html, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT:
OCC: Mark Ginsberg, Risk Expert,
(202) 874–5070, Capital Policy Division;
or Carl Kaminski, Senior Attorney, or
Stuart Feldstein, Director, Legislative
and Regulatory Activities, (202) 874–
5090.
Board: Anna Lee Hewko, (202) 530–
6260, Assistant Director, or Brendan
Burke, (202) 452–2987 Supervisory
Financial Analyst, Division of Banking
Supervision and Regulation, or April C.
Snyder, (202) 452–3099, Counsel, or
Benjamin W. McDonough, (202) 452–
2036, Counsel, Legal Division. For the
hearing impaired only,
Telecommunication Device for the Deaf
(TDD), (202) 263–4869.
FDIC: George French, Deputy
Director, Policy, (202) 898–3929, Nancy
Hunt, Associate Director, Capital
Markets Branch, (202) 898–6643, or
Bobby Bean, Chief, Policy Section (202)
898–6705, Division of Supervision and
Consumer Protection; or Mark Handzlik,
Counsel (202) 898–3990, or Michael
Phillips, Counsel (202) 898–3581,
Supervision and Legislation Branch,
Legal Division.
SUPPLEMENTARY INFORMATION:
I. Background
A. The Dodd-Frank Wall Street Reform
and Consumer Protection Act
Section 171(b)(2) of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (the Act) 4 states that the
agencies 5 shall establish minimum risk-
based capital requirements applicable to
insured depository institutions,
depository institution holding
companies, and nonbank financial
companies supervised by the Federal
Reserve (covered institutions). In
particular, and as described in more
detail below, sections 171(b)(1) and (2)
specify that the minimum leverage and
risk-based capital requirements
established under section 171 shall not
be less than ‘‘generally applicable’’
capital requirements, which shall serve
as a floor for any capital requirements
the agencies may require. Moreover,
sections 171(b)(1) and (2) specify that
the Federal banking agencies may not
establish leverage or risk-based capital
requirements for covered institutions
that are quantitatively lower than the
generally applicable leverage or risk-
based capital requirements in effect for
insured depository institutions as of the
date of enactment of the Act.
B. Advanced Approaches Rules
On December 7, 2007, the agencies
implemented the advanced approaches
rules, which are mandatory for U.S.
depository institutions and bank
holding companies (collectively,
banking organizations) meeting certain
thresholds for total consolidated assets
or foreign exposure.6 The advanced
approaches rules incorporate a series of
proposals released by the Basel
Committee on Banking Supervision
(Basel Committee or BCBS), including
the Basel Committee’s comprehensive
June 2006 release entitled ‘‘International
Convergence of Capital Measurement
and Capital Standards: A Revised
Framework’’ (New Accord).7
The advanced approaches rules
establish a series of transitional floors to
provide a smooth transition to the
advanced approaches rules and to limit
temporarily the amount by which a
banking organization’s risk-based
capital requirements could decline
relative to the general risk-based capital
rules over a period of at least three years
following completion of a satisfactory
parallel run. The advanced approaches
rules place limits on the amount by
which a banking organization’s risk-
based capital requirements may decline.
Under the advanced approaches rules,
the banking organization must take the
risk-based capital ratios equal to the
lesser of (i) the organization’s ratios
calculated under the advanced
approaches rules and (ii) its ratios
calculated under the general risk-based
capital rules,8 with risk-weighted assets
multiplied by 95 percent, 90 percent,
and 85 percent during the first, second,
and third transitional floor periods,
respectively and compare these ratios to
its minimum risk-based capital ratio
requirements under section 3 of the
advanced approaches rules.9 Under this
approach, banking organizations that
use the advanced approaches rule could
operate with lower minimum risk-based
capital requirements during a
transitional floor period, and potentially
thereafter, than would be required
under the general risk-based capital
rules. At this time, no banking
organization has entered a transitional
floor period and all organizations are
required to compute their risk-based
capital requirements using the general
risk-based capital rules.
C. Requirements of Section 171 of the
Act
Section 171(a)(2) of the Act defines
the term ‘‘generally applicable risk-
based capital requirements’’ to mean:
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srobinson on DSKHWCL6B1PROD with PROPOSALS
4 Public Law 111–203, § 171, 124 Stat. 1376,
1435–38 (2010).
5 Even though the Office of Thrift Supervision
(OTS) is not issuing this notice of proposed
rulemaking (NPR), OTS plans to issue an NPR that
parallels the substance of this notice to amend its
capital regulations at 12 CFR part 567. OTS’s
parallel notice is subject to review by the Office of
Management and Budget pursuant to Executive
Order 12866.
6 72 FR 69288 (December 7, 2007). Subject to
prior supervisory approval, other banking
organizations can opt to use the advanced
approaches rules. See 72 FR 69397 (December 7,
2007).
7 The BCBS is a committee of banking supervisory
authorities established by the central bank
governors of the G–10 countries in 1975. The BCBS
issued the New Accord to modernize its first capital
Accord, which was endorsed by the BCBS members
in 1988 and implemented by the agencies in 1989.
The New Accord, the 1988 Accord, and other
documents issued by the BCBS are available
through the Bank for International Settlements’ Web
site at http://www.bis.org.
8 12 CFR part 3, Appendix A (OCC); 12 CFR parts
208 and 225, Appendix A (Board); and 12 CFR part
325, appendix A (FDIC).
9 Under the advanced approaches rules, the
minimum tier 1 risk-based capital requirement is 4
percent and the total risk-based capital requirement
is 8 percent. See 12 CFR part 3, Appendix C (OCC);
12 CFR part 208, Appendix F and 12 CFR part 225,
Appendix G (Board); and 12 CFR part 325
Appendix D (FDIC).
• FAX: (202) 452–3819 or (202) 452–
3102.
• Mail: Jennifer J. Johnson, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
DC 20551.
All public comments are available
from the Board’s Web site at http://
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper form in Room MP–500 of the
Board’s Martin Building (20th and C
Streets, NW.) between 9 a.m. and 5 p.m.
on weekdays.
FDIC: You may submit by any of the
following methods:
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• Agency Web site: http://
www.FDIC.gov/regulations/laws/
federal/propose.html.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments/Legal
ESS, Federal Deposit Insurance
Corporation, 550 17th Street, NW.,
Washington, DC 20429.
• Hand Delivered/Courier: The guard
station at the rear of the 550 17th Street
Building (located on F Street), on
business days between 7 a.m. and 5 p.m.
• E-mail: comments@FDIC.gov.
Instructions: Submissions received
must include ‘‘FDIC’’ and ‘‘PIN XXXX–
XXXX.’’ Comments received will be
posted without change to http://
www.FDIC.gov/regulations/laws/
federal/propose.html, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT:
OCC: Mark Ginsberg, Risk Expert,
(202) 874–5070, Capital Policy Division;
or Carl Kaminski, Senior Attorney, or
Stuart Feldstein, Director, Legislative
and Regulatory Activities, (202) 874–
5090.
Board: Anna Lee Hewko, (202) 530–
6260, Assistant Director, or Brendan
Burke, (202) 452–2987 Supervisory
Financial Analyst, Division of Banking
Supervision and Regulation, or April C.
Snyder, (202) 452–3099, Counsel, or
Benjamin W. McDonough, (202) 452–
2036, Counsel, Legal Division. For the
hearing impaired only,
Telecommunication Device for the Deaf
(TDD), (202) 263–4869.
FDIC: George French, Deputy
Director, Policy, (202) 898–3929, Nancy
Hunt, Associate Director, Capital
Markets Branch, (202) 898–6643, or
Bobby Bean, Chief, Policy Section (202)
898–6705, Division of Supervision and
Consumer Protection; or Mark Handzlik,
Counsel (202) 898–3990, or Michael
Phillips, Counsel (202) 898–3581,
Supervision and Legislation Branch,
Legal Division.
SUPPLEMENTARY INFORMATION:
I. Background
A. The Dodd-Frank Wall Street Reform
and Consumer Protection Act
Section 171(b)(2) of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (the Act) 4 states that the
agencies 5 shall establish minimum risk-
based capital requirements applicable to
insured depository institutions,
depository institution holding
companies, and nonbank financial
companies supervised by the Federal
Reserve (covered institutions). In
particular, and as described in more
detail below, sections 171(b)(1) and (2)
specify that the minimum leverage and
risk-based capital requirements
established under section 171 shall not
be less than ‘‘generally applicable’’
capital requirements, which shall serve
as a floor for any capital requirements
the agencies may require. Moreover,
sections 171(b)(1) and (2) specify that
the Federal banking agencies may not
establish leverage or risk-based capital
requirements for covered institutions
that are quantitatively lower than the
generally applicable leverage or risk-
based capital requirements in effect for
insured depository institutions as of the
date of enactment of the Act.
B. Advanced Approaches Rules
On December 7, 2007, the agencies
implemented the advanced approaches
rules, which are mandatory for U.S.
depository institutions and bank
holding companies (collectively,
banking organizations) meeting certain
thresholds for total consolidated assets
or foreign exposure.6 The advanced
approaches rules incorporate a series of
proposals released by the Basel
Committee on Banking Supervision
(Basel Committee or BCBS), including
the Basel Committee’s comprehensive
June 2006 release entitled ‘‘International
Convergence of Capital Measurement
and Capital Standards: A Revised
Framework’’ (New Accord).7
The advanced approaches rules
establish a series of transitional floors to
provide a smooth transition to the
advanced approaches rules and to limit
temporarily the amount by which a
banking organization’s risk-based
capital requirements could decline
relative to the general risk-based capital
rules over a period of at least three years
following completion of a satisfactory
parallel run. The advanced approaches
rules place limits on the amount by
which a banking organization’s risk-
based capital requirements may decline.
Under the advanced approaches rules,
the banking organization must take the
risk-based capital ratios equal to the
lesser of (i) the organization’s ratios
calculated under the advanced
approaches rules and (ii) its ratios
calculated under the general risk-based
capital rules,8 with risk-weighted assets
multiplied by 95 percent, 90 percent,
and 85 percent during the first, second,
and third transitional floor periods,
respectively and compare these ratios to
its minimum risk-based capital ratio
requirements under section 3 of the
advanced approaches rules.9 Under this
approach, banking organizations that
use the advanced approaches rule could
operate with lower minimum risk-based
capital requirements during a
transitional floor period, and potentially
thereafter, than would be required
under the general risk-based capital
rules. At this time, no banking
organization has entered a transitional
floor period and all organizations are
required to compute their risk-based
capital requirements using the general
risk-based capital rules.
C. Requirements of Section 171 of the
Act
Section 171(a)(2) of the Act defines
the term ‘‘generally applicable risk-
based capital requirements’’ to mean:
VerDate Mar<15>2010 17:52 Dec 29, 2010 Jkt 223001 PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 E:\FR\FM\30DEP1.SGM 30DEP1
srobinson on DSKHWCL6B1PROD with PROPOSALS