37620 Federal Register / Vol. 76, No. 124 / Tuesday, June 28, 2011 / Rules and Regulations
assessments. The authority for this
action is provided in § 955.42 of the
order. This change amends § 955.142.
The Committee unanimously
recommended this action at its February
17, 2011, meeting.
This rule does not impose any
additional costs on handlers that are
complying with the requirements under
the order. This action only represents
additional costs for handlers who are
delinquent in submitting their reports
and assessments. A 10 day grace period
is also provided before the late penalty
is applied, giving delinquent handlers
additional time to avoid the costs
associated with the late payment charge.
In addition, the late charge and interest
rate were considered reasonable by
industry members who participated in
the discussion of this issue. Since the
late payment charge and interest rate are
percentages of amounts due, the costs,
when applicable, are proportionate and
will not place an extra burden on small
entities as compared to large entities. In
addition, the industry overall benefits if
handler reports and assessments are
collected on time and the Committee’s
compliance costs are reduced,
regardless of entity size.
The Committee discussed alternatives
to this change, including not making a
change to the delinquent assessment
requirements. However, a number of
members commented that if some
handlers are not paying on time, a
change was necessary. The Committee
also considered increasing the interest
rate accrual to daily rather than
monthly, but this option could result in
an interest charge that was
disproportionately large and considered
to be beyond the scope of what is
reasonable and customary under
marketing order programs. Thus, these
alternatives were rejected.
This action will not impose any
additional reporting or recordkeeping
requirements on either small or large
Vidalia onion handlers. As with all
Federal marketing order programs,
reports and forms are periodically
reviewed to reduce information
requirements and duplication by
industry and public sector agencies. As
noted in the Initial Regulatory
Flexibility analysis, USDA has not
identified any relevant Federal rules
that duplicate, overlap or conflict with
this final rule.
AMS is committed to complying with
the E-Government Act, to promote the
use of the Internet and other
information technologies to provide
increased opportunities for citizen
access to Government information and
services, and for other purposes.
In addition, the Committee’s meeting
was widely publicized throughout the
Vidalia onion industry and all
interested persons were invited to
attend the meeting and participate in
Committee deliberations on all issues.
Like all Committee meetings, the
February 17, 2011, meeting was a public
meeting and all entities, both large and
small, were able to express views on
this issue.
A proposed rule concerning this
action was published in the Federal
Register on May 13, 2011 (76 FR 27919).
Copies of the rule were mailed or sent
via facsimile to all Committee members
and Vidalia onion handlers. Finally, the
rule was made available through the
Internet by USDA and the Office of the
Federal Register. A 15-day comment
period ending May 31, 2011, was
provided to allow interested persons to
respond to the proposal. No comments
were received.
A small business guide on complying
with fruit, vegetable, and specialty crop
marketing agreements and orders may
be viewed at: http://www.ams.usda.gov/
MarketingOrdersSmallBusinessGuide.
Any questions about the compliance
guide should be sent to Laurel May at
the previously mentioned address in the
FOR FURTHER INFORMATION CONTACT
section.
After consideration of all relevant
matter presented, including the
information and recommendation
submitted by the Committee and other
available information, it is hereby found
that this rule, as hereinafter set forth,
will tend to effectuate the declared
policy of the Act.
It is further found that good cause
exists for not postponing the effective
date of this rule until 30 days after
publication in the Federal Register (5
U.S.C. 553) because handlers are already
shipping Vidalia onions from the 2011
crop and the Committee wants to
implement these changes as soon as
possible. Further, handlers are aware of
this rule, which was recommended at a
public meeting. Also, a 15-day comment
period was provided for in the proposed
rule.
List of Subjects in 7 CFR Part 955
Marketing agreements, Onions,
Reporting and recordkeeping
requirements.
For the reasons set forth in the
preamble, 7 CFR part 955 is amended as
follows:
PART 955—VIDALIA ONIONS GROWN
IN GEORGIA
■ 1. The authority citation for 7 CFR
part 955 continues to read as follows:
Authority: 7 U.S.C. 601–674.
■ 2. Section 955.142 is amended by
designating the first paragraph as
paragraph (a) and the second paragraph
as paragraph (b), and revising newly
designated paragraph (b) to read as
follows:
§ 955.142 Delinquent assessments.
* * * * *
(b) Each handler shall pay interest of
1.5 percent per month on any
assessments levied pursuant to § 955.42
and on any accrued unpaid interest
beginning the day immediately after the
date the monthly assessments were due,
until the delinquent handler’s
assessments, plus applicable interest,
have been paid in full. In addition to the
interest charge, the Committee shall
impose a late payment charge on any
handler whose assessment payment has
not been received within 10 days of the
due date. The late payment charge shall
be 10 percent of the late assessments.
Dated: June 22, 2011.
Rayne Pegg,
Administrator, Agricultural Marketing
Service.
[FR Doc. 2011–16139 Filed 6–27–11; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 3
[Docket No. –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: Final rule.
SUMMARY: The Office of the Comptroller
of the Currency (OCC), Board of
VerDate Mar<15>2010 14:42 Jun 27, 2011 Jkt 223001 PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 E:\FR\FM\28JNR1.SGM 28JNR1
WReier-Aviles on DSKGBLS3C1PROD with RULES
assessments. The authority for this
action is provided in § 955.42 of the
order. This change amends § 955.142.
The Committee unanimously
recommended this action at its February
17, 2011, meeting.
This rule does not impose any
additional costs on handlers that are
complying with the requirements under
the order. This action only represents
additional costs for handlers who are
delinquent in submitting their reports
and assessments. A 10 day grace period
is also provided before the late penalty
is applied, giving delinquent handlers
additional time to avoid the costs
associated with the late payment charge.
In addition, the late charge and interest
rate were considered reasonable by
industry members who participated in
the discussion of this issue. Since the
late payment charge and interest rate are
percentages of amounts due, the costs,
when applicable, are proportionate and
will not place an extra burden on small
entities as compared to large entities. In
addition, the industry overall benefits if
handler reports and assessments are
collected on time and the Committee’s
compliance costs are reduced,
regardless of entity size.
The Committee discussed alternatives
to this change, including not making a
change to the delinquent assessment
requirements. However, a number of
members commented that if some
handlers are not paying on time, a
change was necessary. The Committee
also considered increasing the interest
rate accrual to daily rather than
monthly, but this option could result in
an interest charge that was
disproportionately large and considered
to be beyond the scope of what is
reasonable and customary under
marketing order programs. Thus, these
alternatives were rejected.
This action will not impose any
additional reporting or recordkeeping
requirements on either small or large
Vidalia onion handlers. As with all
Federal marketing order programs,
reports and forms are periodically
reviewed to reduce information
requirements and duplication by
industry and public sector agencies. As
noted in the Initial Regulatory
Flexibility analysis, USDA has not
identified any relevant Federal rules
that duplicate, overlap or conflict with
this final rule.
AMS is committed to complying with
the E-Government Act, to promote the
use of the Internet and other
information technologies to provide
increased opportunities for citizen
access to Government information and
services, and for other purposes.
In addition, the Committee’s meeting
was widely publicized throughout the
Vidalia onion industry and all
interested persons were invited to
attend the meeting and participate in
Committee deliberations on all issues.
Like all Committee meetings, the
February 17, 2011, meeting was a public
meeting and all entities, both large and
small, were able to express views on
this issue.
A proposed rule concerning this
action was published in the Federal
Register on May 13, 2011 (76 FR 27919).
Copies of the rule were mailed or sent
via facsimile to all Committee members
and Vidalia onion handlers. Finally, the
rule was made available through the
Internet by USDA and the Office of the
Federal Register. A 15-day comment
period ending May 31, 2011, was
provided to allow interested persons to
respond to the proposal. No comments
were received.
A small business guide on complying
with fruit, vegetable, and specialty crop
marketing agreements and orders may
be viewed at: http://www.ams.usda.gov/
MarketingOrdersSmallBusinessGuide.
Any questions about the compliance
guide should be sent to Laurel May at
the previously mentioned address in the
FOR FURTHER INFORMATION CONTACT
section.
After consideration of all relevant
matter presented, including the
information and recommendation
submitted by the Committee and other
available information, it is hereby found
that this rule, as hereinafter set forth,
will tend to effectuate the declared
policy of the Act.
It is further found that good cause
exists for not postponing the effective
date of this rule until 30 days after
publication in the Federal Register (5
U.S.C. 553) because handlers are already
shipping Vidalia onions from the 2011
crop and the Committee wants to
implement these changes as soon as
possible. Further, handlers are aware of
this rule, which was recommended at a
public meeting. Also, a 15-day comment
period was provided for in the proposed
rule.
List of Subjects in 7 CFR Part 955
Marketing agreements, Onions,
Reporting and recordkeeping
requirements.
For the reasons set forth in the
preamble, 7 CFR part 955 is amended as
follows:
PART 955—VIDALIA ONIONS GROWN
IN GEORGIA
■ 1. The authority citation for 7 CFR
part 955 continues to read as follows:
Authority: 7 U.S.C. 601–674.
■ 2. Section 955.142 is amended by
designating the first paragraph as
paragraph (a) and the second paragraph
as paragraph (b), and revising newly
designated paragraph (b) to read as
follows:
§ 955.142 Delinquent assessments.
* * * * *
(b) Each handler shall pay interest of
1.5 percent per month on any
assessments levied pursuant to § 955.42
and on any accrued unpaid interest
beginning the day immediately after the
date the monthly assessments were due,
until the delinquent handler’s
assessments, plus applicable interest,
have been paid in full. In addition to the
interest charge, the Committee shall
impose a late payment charge on any
handler whose assessment payment has
not been received within 10 days of the
due date. The late payment charge shall
be 10 percent of the late assessments.
Dated: June 22, 2011.
Rayne Pegg,
Administrator, Agricultural Marketing
Service.
[FR Doc. 2011–16139 Filed 6–27–11; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 3
[Docket No. –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: Final rule.
SUMMARY: The Office of the Comptroller
of the Currency (OCC), Board of
VerDate Mar<15>2010 14:42 Jun 27, 2011 Jkt 223001 PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 E:\FR\FM\28JNR1.SGM 28JNR1
WReier-Aviles on DSKGBLS3C1PROD with RULES
37621Federal Register / Vol. 76, No. 124 / Tuesday, June 28, 2011 / Rules and Regulations
1 Public Law 111–203, section 171, 124 Stat.
1376, 1435–38 (2010).
2 12 U.S.C. 5371, Public Law 111–203, section
171, 124 Stat. 1376, 1435–38 (2010).
3 On March 8, 2011, in an NPR that paralleled the
agencies’ rulemaking, the Office of Thrift
Supervision (OTS) issued a notice in which OTS
proposed to amend 12 CFR part 567, which sets
forth the capital regulations applicable to savings
associations. 45 FR 12,611 (March 8, 2011). OTS
received one comment on its proposal. The Act
specifies that the regulatory authority and other
functions of OTS will transfer to OCC on the
transfer date provided in the Act, which is expected
to be July 21, 2011. Given that the OTS’s parallel
rulemaking is subject to a 90 day review by the
Office of Management and Budget pursuant to
Executive Order 12866, it would be impracticable
for OTS to issue a final rule before the transfer date.
The OTS and OCC anticipate that OCC would issue
a final rule to amend the capital regulations
applicable to savings associations, after the transfer
date.
4 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).
5 72 FR 69288 (December 7, 2007). Subject to
prior supervisory approval, other banking
organizations can opt to use the advanced
approaches rules. Id. at 69397.
6 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 (‘‘International Convergence of Capital
Measurement and Capital Standards’’ or ‘‘Basel I’’),
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.
7 12 CFR part 3, Appendix A (OCC); 12 CFR parts
208 and 225, Appendix A (Board); 12 CFR part 325,
Appendix A (FDIC).
8 Under the advanced approaches rules, the
minimum tier 1 risk-based capital ratio is 4 percent
and the minimum total risk-based capital ratio 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).
Governors of the Federal Reserve
System (Board), and the Federal Deposit
Insurance Corporation (FDIC)
(collectively, the agencies) are amending
the advanced risk-based capital
adequacy standards (advanced
approaches rules) in a manner that is
consistent with certain provisions of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act (the Act), and
the general risk-based capital rules 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: This final rule is effective July
28, 2011.
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, Senior
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,
Division of Risk Management
Supervision; 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. Overview of the Requirements of the
Act
Section 171(b)(2) of the Act 1 states
that the agencies shall establish
minimum risk-based capital
requirements on a consolidated basis for
insured depository institutions,
depository institution holding
companies, and nonbank financial
companies supervised by the Federal
Reserve (covered institutions).2 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 the ‘‘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.3
B. Advanced Approaches Rules 4
On December 7, 2007, the agencies
published in the Federal Register a final
rule to implement the advanced
approaches rules, which are mandatory
for banks and bank holding companies
(collectively, banking organizations)
meeting certain thresholds for total
consolidated assets or foreign
exposure.5 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).6
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, the advanced approaches rules
established a series of transitional floors
over a period of at least three years
following a banking organization’s
completion of a satisfactory parallel
run.7 During the transitional floor
periods, a banking organization’s risk-
based capital ratios are 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, with tier 1 and total risk-
weighted assets as calculated under the
general risk-based capital rules
multiplied by 95 percent, 90 percent,
and 85 percent during the first, second,
and third transitional floor periods,
respectively.8 Under this approach, a
banking organization that uses the
advanced approaches rules is permitted
to 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. To date, no U.S.-domiciled
banking organization has entered a
transitional floor period and all U.S-
domiciled banking 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:
‘‘(A) the risk-based capital requirements,
as established by the appropriate
Federal banking agencies to apply to
insured depository institutions under
the prompt corrective action regulations
implementing section 38 of the Federal
Deposit Insurance Act, regardless of
total consolidated asset size or foreign
financial exposure; and (B) includes the
regulatory capital components in the
numerator of those capital requirements,
the risk-weighted assets in the
denominator of those capital
requirements, and the required ratio of
the numerator to the denominator.’’
Section 171(b)(2) of the Act further
VerDate Mar<15>2010 14:42 Jun 27, 2011 Jkt 223001 PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 E:\FR\FM\28JNR1.SGM 28JNR1
WReier-Aviles on DSKGBLS3C1PROD with RULES
1 Public Law 111–203, section 171, 124 Stat.
1376, 1435–38 (2010).
2 12 U.S.C. 5371, Public Law 111–203, section
171, 124 Stat. 1376, 1435–38 (2010).
3 On March 8, 2011, in an NPR that paralleled the
agencies’ rulemaking, the Office of Thrift
Supervision (OTS) issued a notice in which OTS
proposed to amend 12 CFR part 567, which sets
forth the capital regulations applicable to savings
associations. 45 FR 12,611 (March 8, 2011). OTS
received one comment on its proposal. The Act
specifies that the regulatory authority and other
functions of OTS will transfer to OCC on the
transfer date provided in the Act, which is expected
to be July 21, 2011. Given that the OTS’s parallel
rulemaking is subject to a 90 day review by the
Office of Management and Budget pursuant to
Executive Order 12866, it would be impracticable
for OTS to issue a final rule before the transfer date.
The OTS and OCC anticipate that OCC would issue
a final rule to amend the capital regulations
applicable to savings associations, after the transfer
date.
4 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).
5 72 FR 69288 (December 7, 2007). Subject to
prior supervisory approval, other banking
organizations can opt to use the advanced
approaches rules. Id. at 69397.
6 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 (‘‘International Convergence of Capital
Measurement and Capital Standards’’ or ‘‘Basel I’’),
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.
7 12 CFR part 3, Appendix A (OCC); 12 CFR parts
208 and 225, Appendix A (Board); 12 CFR part 325,
Appendix A (FDIC).
8 Under the advanced approaches rules, the
minimum tier 1 risk-based capital ratio is 4 percent
and the minimum total risk-based capital ratio 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).
Governors of the Federal Reserve
System (Board), and the Federal Deposit
Insurance Corporation (FDIC)
(collectively, the agencies) are amending
the advanced risk-based capital
adequacy standards (advanced
approaches rules) in a manner that is
consistent with certain provisions of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act (the Act), and
the general risk-based capital rules 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: This final rule is effective July
28, 2011.
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, Senior
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,
Division of Risk Management
Supervision; 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. Overview of the Requirements of the
Act
Section 171(b)(2) of the Act 1 states
that the agencies shall establish
minimum risk-based capital
requirements on a consolidated basis for
insured depository institutions,
depository institution holding
companies, and nonbank financial
companies supervised by the Federal
Reserve (covered institutions).2 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 the ‘‘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.3
B. Advanced Approaches Rules 4
On December 7, 2007, the agencies
published in the Federal Register a final
rule to implement the advanced
approaches rules, which are mandatory
for banks and bank holding companies
(collectively, banking organizations)
meeting certain thresholds for total
consolidated assets or foreign
exposure.5 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).6
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, the advanced approaches rules
established a series of transitional floors
over a period of at least three years
following a banking organization’s
completion of a satisfactory parallel
run.7 During the transitional floor
periods, a banking organization’s risk-
based capital ratios are 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, with tier 1 and total risk-
weighted assets as calculated under the
general risk-based capital rules
multiplied by 95 percent, 90 percent,
and 85 percent during the first, second,
and third transitional floor periods,
respectively.8 Under this approach, a
banking organization that uses the
advanced approaches rules is permitted
to 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. To date, no U.S.-domiciled
banking organization has entered a
transitional floor period and all U.S-
domiciled banking 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:
‘‘(A) the risk-based capital requirements,
as established by the appropriate
Federal banking agencies to apply to
insured depository institutions under
the prompt corrective action regulations
implementing section 38 of the Federal
Deposit Insurance Act, regardless of
total consolidated asset size or foreign
financial exposure; and (B) includes the
regulatory capital components in the
numerator of those capital requirements,
the risk-weighted assets in the
denominator of those capital
requirements, and the required ratio of
the numerator to the denominator.’’
Section 171(b)(2) of the Act further
VerDate Mar<15>2010 14:42 Jun 27, 2011 Jkt 223001 PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 E:\FR\FM\28JNR1.SGM 28JNR1
WReier-Aviles on DSKGBLS3C1PROD with RULES