49984 Federal Register / Vol. 82, No. 207 / Friday, October 27, 2017 / Proposed Rules
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 3
[Docket ID OCC–2017–0018]
RIN 1557–AE10
FEDERAL RESERVE SYSTEM
12 CFR Part 217
[Regulation Q; Docket No. R–1576]
RIN 7100 AE–74
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 324
RIN 3064–AE59
Simplifications to the Capital Rule
Pursuant to the Economic Growth and
Regulatory Paperwork Reduction Act
of 1996
AGENCY: Office of the Comptroller of the
Currency, Treasury; the Board of
Governors of the Federal Reserve
System; and the Federal Deposit
Insurance Corporation.
ACTION: Notice of proposed rulemaking.
SUMMARY: In March 2017, the Office of
the Comptroller of the Currency, the
Board of Governors of the Federal
Reserve System, and the Federal Deposit
Insurance Corporation (collectively, the
agencies) submitted a report to Congress
pursuant to the Economic Growth and
Regulatory Paperwork Reduction Act of
1996, in which they committed to
meaningfully reduce regulatory burden,
especially on community banking
organizations. Consistent with that
commitment, the agencies are inviting
public comment on a notice of proposed
rulemaking that would simplify
compliance with certain aspects of the
capital rule. A majority of the proposed
simplifications would apply solely to
banking organizations that are not
subject to the advanced approaches
capital rule (non-advanced approaches
banking organizations). Specifically, the
agencies are proposing that non-
advanced approaches banking
organizations apply a simpler regulatory
capital treatment for: Mortgage servicing
assets; certain deferred tax assets arising
from temporary differences; investments
in the capital of unconsolidated
financial institutions; and capital issued
by a consolidated subsidiary of a
banking organization and held by third
parties (minority interest). More
generally, the proposal also includes
revisions to the treatment of certain
acquisition, development, or
construction exposures that are
designed to address comments regarding
the current definition of high volatility
commercial real estate exposure under
the capital rule’s standardized
approach. Under the standardized
approach, the proposed revisions to the
treatment of acquisition, development,
or construction exposures would not
apply to existing exposures that are
outstanding or committed prior to any
final rule’s effective date.
In addition to the proposed
simplifications, the agencies also are
proposing various additional
clarifications and technical amendments
to the agencies’ capital rule, which
would apply to both non-advanced
approaches banking organizations and
advanced approaches banking
organizations.
DATES: Comments must be received by
December 26, 2017.
ADDRESSES: Comments should be
directed to:
OCC: Because paper mail in the
Washington, DC area and at the OCC is
subject to delay, commenters are
encouraged to submit comments
through the Federal eRulemaking Portal
or email, if possible. Please use the title
‘‘Simplifications to the Capital Rule
Pursuant to the Economic Growth and
Regulatory Paperwork Reduction Act of
1996’’ 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
www.regulations.gov. Enter ‘‘Docket ID
OCC–2017–0018’’ in the Search Box and
click ‘‘Search.’’ Click on ‘‘Comment
Now’’ to submit public comments.
• Click on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov,
including instructions for submitting
public comments.
• Email: regs.comments@
occ.treas.gov.
• Mail: Legislative and Regulatory
Activities Division, Office of the
Comptroller of the Currency, 400 7th
Street SW., Suite 3E–218, Mail Stop
9W–11, Washington, DC 20219.
• Hand Delivery/Courier: 400 7th
Street SW., Suite 3E–218, Mail Stop
9W–11, Washington, DC 20219.
• Fax: (571) 465–4326.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
ID OCC–2017–0018’’ in your comment.
In general, the 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, email 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
include 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
rulemaking action by any of the
following methods:
• Viewing Comments Electronically:
Go to www.regulations.gov. Enter
‘‘Docket ID OCC–2017–0018’’ in the
Search box and click ‘‘Search.’’ Click on
‘‘Open Docket Folder’’ on the right side
of the screen and then ‘‘Comments.’’
Comments can be filtered by clicking on
‘‘View All’’ and then using the filtering
tools on the left side of the screen.
• Click on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov.
Supporting materials may be viewed by
clicking on ‘‘Open Docket Folder’’ and
then clicking on ‘‘Supporting
Documents.’’ The docket may be viewed
after the close of the comment period in
the same manner as during the comment
period.
Viewing Comments Personally: You
may personally inspect and photocopy
comments at the OCC, 400 7th Street
SW., Washington, DC 20219. For
security reasons, the OCC requires that
visitors make an appointment to inspect
comments. You may do so by calling
(202) 649–6700 or, for persons who are
deaf or hearing impaired, TTY, (202)
649–5597. Upon arrival, visitors will be
required to present valid government-
issued photo identification and submit
to security screening in order to inspect
and photocopy comments.
Board: You may submit comments,
identified by Docket No. R–1576; RIN
7100 AE–74, 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.
• Email: regs.comments@
federalreserve.gov. Include docket
number in the subject line of the
message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Ann E. Misback, Secretary,
Board of Governors of the Federal
VerDate Sep<11>2014 19:58 Oct 26, 2017 Jkt 244001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 E:\FR\FM\27OCP2.SGM 27OCP2
asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 3
[Docket ID OCC–2017–0018]
RIN 1557–AE10
FEDERAL RESERVE SYSTEM
12 CFR Part 217
[Regulation Q; Docket No. R–1576]
RIN 7100 AE–74
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 324
RIN 3064–AE59
Simplifications to the Capital Rule
Pursuant to the Economic Growth and
Regulatory Paperwork Reduction Act
of 1996
AGENCY: Office of the Comptroller of the
Currency, Treasury; the Board of
Governors of the Federal Reserve
System; and the Federal Deposit
Insurance Corporation.
ACTION: Notice of proposed rulemaking.
SUMMARY: In March 2017, the Office of
the Comptroller of the Currency, the
Board of Governors of the Federal
Reserve System, and the Federal Deposit
Insurance Corporation (collectively, the
agencies) submitted a report to Congress
pursuant to the Economic Growth and
Regulatory Paperwork Reduction Act of
1996, in which they committed to
meaningfully reduce regulatory burden,
especially on community banking
organizations. Consistent with that
commitment, the agencies are inviting
public comment on a notice of proposed
rulemaking that would simplify
compliance with certain aspects of the
capital rule. A majority of the proposed
simplifications would apply solely to
banking organizations that are not
subject to the advanced approaches
capital rule (non-advanced approaches
banking organizations). Specifically, the
agencies are proposing that non-
advanced approaches banking
organizations apply a simpler regulatory
capital treatment for: Mortgage servicing
assets; certain deferred tax assets arising
from temporary differences; investments
in the capital of unconsolidated
financial institutions; and capital issued
by a consolidated subsidiary of a
banking organization and held by third
parties (minority interest). More
generally, the proposal also includes
revisions to the treatment of certain
acquisition, development, or
construction exposures that are
designed to address comments regarding
the current definition of high volatility
commercial real estate exposure under
the capital rule’s standardized
approach. Under the standardized
approach, the proposed revisions to the
treatment of acquisition, development,
or construction exposures would not
apply to existing exposures that are
outstanding or committed prior to any
final rule’s effective date.
In addition to the proposed
simplifications, the agencies also are
proposing various additional
clarifications and technical amendments
to the agencies’ capital rule, which
would apply to both non-advanced
approaches banking organizations and
advanced approaches banking
organizations.
DATES: Comments must be received by
December 26, 2017.
ADDRESSES: Comments should be
directed to:
OCC: Because paper mail in the
Washington, DC area and at the OCC is
subject to delay, commenters are
encouraged to submit comments
through the Federal eRulemaking Portal
or email, if possible. Please use the title
‘‘Simplifications to the Capital Rule
Pursuant to the Economic Growth and
Regulatory Paperwork Reduction Act of
1996’’ 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
www.regulations.gov. Enter ‘‘Docket ID
OCC–2017–0018’’ in the Search Box and
click ‘‘Search.’’ Click on ‘‘Comment
Now’’ to submit public comments.
• Click on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov,
including instructions for submitting
public comments.
• Email: regs.comments@
occ.treas.gov.
• Mail: Legislative and Regulatory
Activities Division, Office of the
Comptroller of the Currency, 400 7th
Street SW., Suite 3E–218, Mail Stop
9W–11, Washington, DC 20219.
• Hand Delivery/Courier: 400 7th
Street SW., Suite 3E–218, Mail Stop
9W–11, Washington, DC 20219.
• Fax: (571) 465–4326.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
ID OCC–2017–0018’’ in your comment.
In general, the 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, email 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
include 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
rulemaking action by any of the
following methods:
• Viewing Comments Electronically:
Go to www.regulations.gov. Enter
‘‘Docket ID OCC–2017–0018’’ in the
Search box and click ‘‘Search.’’ Click on
‘‘Open Docket Folder’’ on the right side
of the screen and then ‘‘Comments.’’
Comments can be filtered by clicking on
‘‘View All’’ and then using the filtering
tools on the left side of the screen.
• Click on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov.
Supporting materials may be viewed by
clicking on ‘‘Open Docket Folder’’ and
then clicking on ‘‘Supporting
Documents.’’ The docket may be viewed
after the close of the comment period in
the same manner as during the comment
period.
Viewing Comments Personally: You
may personally inspect and photocopy
comments at the OCC, 400 7th Street
SW., Washington, DC 20219. For
security reasons, the OCC requires that
visitors make an appointment to inspect
comments. You may do so by calling
(202) 649–6700 or, for persons who are
deaf or hearing impaired, TTY, (202)
649–5597. Upon arrival, visitors will be
required to present valid government-
issued photo identification and submit
to security screening in order to inspect
and photocopy comments.
Board: You may submit comments,
identified by Docket No. R–1576; RIN
7100 AE–74, 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.
• Email: regs.comments@
federalreserve.gov. Include docket
number in the subject line of the
message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Ann E. Misback, Secretary,
Board of Governors of the Federal
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asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
49985Federal Register / Vol. 82, No. 207 / Friday, October 27, 2017 / Proposed Rules
1 The Board and the OCC issued a joint final rule
on October 11, 2013 (78 FR 62018) and the FDIC
issued a substantially identical interim final rule on
September 10, 2013 (78 FR 55340). In April 2014,
the FDIC adopted the interim final rule as a final
rule with no substantive changes. 79 FR 20754
(April 14, 2014).
2 Banking organizations subject to the agencies’
capital rule include national banks, state member
banks, state nonmember banks, savings
associations, and top-tier bank holding companies
and savings and loan holding companies domiciled
in the United States not subject to the Board’s Small
Bank Holding Company Policy Statement (12 CFR
part 225, appendix C), but excluding certain savings
and loan holding companies that are substantially
engaged in insurance underwriting or commercial
activities or that are estate trusts, and bank holding
companies and savings and loan holding companies
that are employee stock ownership plans.
3 12 CFR part 217 (Board); 12 CFR part 3 (OCC);
12 CFR part 324 (FDIC).
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, 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
3515, 1801 K Street NW. (between 18th
and 19th Streets NW.), Washington, DC
20006 between 9:00 a.m. and 5:00 p.m.
on weekdays. FDIC: You may submit
comments, identified by RIN 3064–
AE59 by any of the following methods:
• Agency Web site: http://
www.FDIC.gov/regulations/laws/
federal/propose.html. Follow
instructions for submitting comments
on the Agency Web site.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments/Legal
ESS, Federal Deposit Insurance
Corporation, 550 17th Street NW.,
Washington, DC 20429.
• Hand Delivered/Courier: Comments
may be hand-delivered to the guard
station at the rear of the 550 17th Street
Building (located on F Street) on
business days between 7:00 a.m. and
5:00 p.m.
• Email: comments@FDIC.gov.
Include the RIN 3064–AE59 on the
subject line of the message.
• Public Inspection: All comments
received must include the agency name
and RIN 3064–AE66 for this rulemaking.
All comments received will be posted
without change to http://www.fdic.gov/
regulations/laws/federal/, including any
personal information provided. Paper
copies of public comments may be
ordered from the FDIC Public
Information Center, 3501 North Fairfax
Drive, Room E–1002, Arlington, VA
22226 by telephone at (877) 275–3342 or
(703) 562–2200.
FOR FURTHER INFORMATION CONTACT:
OCC: Mark Ginsberg, Senior Risk
Expert (202) 649–6983; or Benjamin
Pegg, Risk Expert (202) 649–7146,
Capital and Regulatory Policy; or Carl
Kaminski, Special Counsel, or Rima
Kundnani, Attorney, Legislative and
Regulatory Activities Division, (202)
649–5490, for persons who are deaf or
hearing impaired, TTY, (202) 649–5597,
Office of the Comptroller of the
Currency, 400 7th Street SW.,
Washington, DC 20219.
Board: Constance M. Horsley, Deputy
Associate Director, (202) 452–5239; Juan
Climent, Manager, (202) 872–7526;
Elizabeth MacDonald, Manager, (202)
475–6316; Andrew Willis, Supervisory
Financial Analyst, (202) 912–4323; Sean
Healey, Supervisory Financial Analyst,
(202) 912–4611 or Matthew McQueeney,
Senior Financial Analyst, (202) 452–
2942, Division of Supervision and
Regulation; or Benjamin McDonough,
Assistant General Counsel (202) 452–
2036; David W. Alexander, Counsel
(202) 452–2877, or Mark Buresh, Senior
Attorney (202) 452–5270, Legal
Division, Board of Governors of the
Federal Reserve System, 20th and C
Streets NW., Washington, DC 20551. For
the hearing impaired only,
Telecommunication Device for the Deaf
(TDD), (202) 263–4869.
FDIC: Benedetto Bosco, Chief, Capital
Policy Section; bbosco@fdic.gov; David
Riley, Senior Policy Analyst, Capital
Policy Section; dariley@fdic.gov;
Michael Maloney, Senior Policy
Analyst, mmaloney@fdic.gov; Stephanie
Efron, Senior Policy Analyst, sefron@
fdic.gov; regulatorycapital@fdic.gov;
Capital Markets Branch, Division of Risk
Management Supervision, (202) 898–
6888; or Catherine Wood, Counsel,
cawood@fdic.gov; Rachel Ackmann,
Counsel, rackmann@fdic.gov; Michael
Phillips, Counsel, mphillips@fdic.gov;
Supervision Branch, Legal Division,
Federal Deposit Insurance Corporation,
550 17th Street NW., Washington, DC
20429.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction and Summary of the Proposed
Simplifications of the Capital Rule
II. Proposed Simplifications of and Revisions
to the Capital Rule
A. HVADC Exposures
1. Background
2. Scope of the HVADC Exposure
Definition
3. Exemptions From the HVADC Exposure
Definition
a. Removal of the Contributed Capital
Exemption Under HVADC Exposure
b. One- to Four-Family Residential
Properties
c. Community Development Projects
d. Agricultural Exposures
4. Permanent Loans
5. Risk Weight for HVADC Exposures
6. Retaining the HVCRE Exposure
Definition Under the Advanced
Approaches Rule
7. Frequently Asked Questions (FAQs)
B. MSAs, Temporary Difference DTAs, and
Investments in the Capital of
Unconsolidated Financial Institutions
1. Background
2. Simplifying the Capital Treatment for
MSAs, Temporary Difference DTAs, and
Investments in the Capital of
Unconsolidated Financial Institutions
a. MSAs and Temporary Difference DTAs
b. Investments in the Capital of
Unconsolidated Financial Institutions
c. Regulatory Treatment for Advanced
Approaches Banking Organizations
C. Minority Interest
1. Background
2. Simplifying the Regulatory Capital
Limitations for Minority Interest
III. Technical Amendments to the Capital
Rule
IV. Abbreviations
V. Regulatory Analyses
A. Paperwork Reduction Act
B. Regulatory Flexibility Act Analysis
C. Plain Language
D. OCC Unfunded Mandates Reform Act of
1995 Determination
E. Riegle Community Development and
Regulatory Improvement Act of 1994
I. Introduction and Summary of the
Proposed Simplifications of the Capital
Rule
The Office of the Comptroller of the
Currency (OCC), the Board of Governors
of the Federal Reserve System (Board),
and the Federal Deposit Insurance
Corporation (FDIC) (collectively, the
agencies) are issuing this notice of
proposed rulemaking (proposal or
proposed rule) with the goal of reducing
regulatory compliance burden,
particularly on community banking
organizations, by simplifying certain
aspects of the agencies’ rules revising
their risk-based and leverage capital
requirements (capital rule).1
In 2013, the agencies adopted the
capital rule to address weaknesses that
became apparent during the financial
crisis of 2007–08. Principally, the
capital rule strengthened the capital
requirements applicable to banking
organizations 2 supervised by the
agencies by improving both the quality
and quantity of banking organizations’
regulatory capital, and increasing the
risk-sensitivity of the capital rule.3
The capital rule provides two
methodologies for determining risk-
weighted assets: (i) The standardized
approach and (ii) the advanced
approaches, which include both the
internal ratings-based approach and the
advanced measurement approach (the
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asabaliauskas on DSKBBXCHB2PROD with PROPOSALS
1 The Board and the OCC issued a joint final rule
on October 11, 2013 (78 FR 62018) and the FDIC
issued a substantially identical interim final rule on
September 10, 2013 (78 FR 55340). In April 2014,
the FDIC adopted the interim final rule as a final
rule with no substantive changes. 79 FR 20754
(April 14, 2014).
2 Banking organizations subject to the agencies’
capital rule include national banks, state member
banks, state nonmember banks, savings
associations, and top-tier bank holding companies
and savings and loan holding companies domiciled
in the United States not subject to the Board’s Small
Bank Holding Company Policy Statement (12 CFR
part 225, appendix C), but excluding certain savings
and loan holding companies that are substantially
engaged in insurance underwriting or commercial
activities or that are estate trusts, and bank holding
companies and savings and loan holding companies
that are employee stock ownership plans.
3 12 CFR part 217 (Board); 12 CFR part 3 (OCC);
12 CFR part 324 (FDIC).
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, 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
3515, 1801 K Street NW. (between 18th
and 19th Streets NW.), Washington, DC
20006 between 9:00 a.m. and 5:00 p.m.
on weekdays. FDIC: You may submit
comments, identified by RIN 3064–
AE59 by any of the following methods:
• Agency Web site: http://
www.FDIC.gov/regulations/laws/
federal/propose.html. Follow
instructions for submitting comments
on the Agency Web site.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments/Legal
ESS, Federal Deposit Insurance
Corporation, 550 17th Street NW.,
Washington, DC 20429.
• Hand Delivered/Courier: Comments
may be hand-delivered to the guard
station at the rear of the 550 17th Street
Building (located on F Street) on
business days between 7:00 a.m. and
5:00 p.m.
• Email: comments@FDIC.gov.
Include the RIN 3064–AE59 on the
subject line of the message.
• Public Inspection: All comments
received must include the agency name
and RIN 3064–AE66 for this rulemaking.
All comments received will be posted
without change to http://www.fdic.gov/
regulations/laws/federal/, including any
personal information provided. Paper
copies of public comments may be
ordered from the FDIC Public
Information Center, 3501 North Fairfax
Drive, Room E–1002, Arlington, VA
22226 by telephone at (877) 275–3342 or
(703) 562–2200.
FOR FURTHER INFORMATION CONTACT:
OCC: Mark Ginsberg, Senior Risk
Expert (202) 649–6983; or Benjamin
Pegg, Risk Expert (202) 649–7146,
Capital and Regulatory Policy; or Carl
Kaminski, Special Counsel, or Rima
Kundnani, Attorney, Legislative and
Regulatory Activities Division, (202)
649–5490, for persons who are deaf or
hearing impaired, TTY, (202) 649–5597,
Office of the Comptroller of the
Currency, 400 7th Street SW.,
Washington, DC 20219.
Board: Constance M. Horsley, Deputy
Associate Director, (202) 452–5239; Juan
Climent, Manager, (202) 872–7526;
Elizabeth MacDonald, Manager, (202)
475–6316; Andrew Willis, Supervisory
Financial Analyst, (202) 912–4323; Sean
Healey, Supervisory Financial Analyst,
(202) 912–4611 or Matthew McQueeney,
Senior Financial Analyst, (202) 452–
2942, Division of Supervision and
Regulation; or Benjamin McDonough,
Assistant General Counsel (202) 452–
2036; David W. Alexander, Counsel
(202) 452–2877, or Mark Buresh, Senior
Attorney (202) 452–5270, Legal
Division, Board of Governors of the
Federal Reserve System, 20th and C
Streets NW., Washington, DC 20551. For
the hearing impaired only,
Telecommunication Device for the Deaf
(TDD), (202) 263–4869.
FDIC: Benedetto Bosco, Chief, Capital
Policy Section; bbosco@fdic.gov; David
Riley, Senior Policy Analyst, Capital
Policy Section; dariley@fdic.gov;
Michael Maloney, Senior Policy
Analyst, mmaloney@fdic.gov; Stephanie
Efron, Senior Policy Analyst, sefron@
fdic.gov; regulatorycapital@fdic.gov;
Capital Markets Branch, Division of Risk
Management Supervision, (202) 898–
6888; or Catherine Wood, Counsel,
cawood@fdic.gov; Rachel Ackmann,
Counsel, rackmann@fdic.gov; Michael
Phillips, Counsel, mphillips@fdic.gov;
Supervision Branch, Legal Division,
Federal Deposit Insurance Corporation,
550 17th Street NW., Washington, DC
20429.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction and Summary of the Proposed
Simplifications of the Capital Rule
II. Proposed Simplifications of and Revisions
to the Capital Rule
A. HVADC Exposures
1. Background
2. Scope of the HVADC Exposure
Definition
3. Exemptions From the HVADC Exposure
Definition
a. Removal of the Contributed Capital
Exemption Under HVADC Exposure
b. One- to Four-Family Residential
Properties
c. Community Development Projects
d. Agricultural Exposures
4. Permanent Loans
5. Risk Weight for HVADC Exposures
6. Retaining the HVCRE Exposure
Definition Under the Advanced
Approaches Rule
7. Frequently Asked Questions (FAQs)
B. MSAs, Temporary Difference DTAs, and
Investments in the Capital of
Unconsolidated Financial Institutions
1. Background
2. Simplifying the Capital Treatment for
MSAs, Temporary Difference DTAs, and
Investments in the Capital of
Unconsolidated Financial Institutions
a. MSAs and Temporary Difference DTAs
b. Investments in the Capital of
Unconsolidated Financial Institutions
c. Regulatory Treatment for Advanced
Approaches Banking Organizations
C. Minority Interest
1. Background
2. Simplifying the Regulatory Capital
Limitations for Minority Interest
III. Technical Amendments to the Capital
Rule
IV. Abbreviations
V. Regulatory Analyses
A. Paperwork Reduction Act
B. Regulatory Flexibility Act Analysis
C. Plain Language
D. OCC Unfunded Mandates Reform Act of
1995 Determination
E. Riegle Community Development and
Regulatory Improvement Act of 1994
I. Introduction and Summary of the
Proposed Simplifications of the Capital
Rule
The Office of the Comptroller of the
Currency (OCC), the Board of Governors
of the Federal Reserve System (Board),
and the Federal Deposit Insurance
Corporation (FDIC) (collectively, the
agencies) are issuing this notice of
proposed rulemaking (proposal or
proposed rule) with the goal of reducing
regulatory compliance burden,
particularly on community banking
organizations, by simplifying certain
aspects of the agencies’ rules revising
their risk-based and leverage capital
requirements (capital rule).1
In 2013, the agencies adopted the
capital rule to address weaknesses that
became apparent during the financial
crisis of 2007–08. Principally, the
capital rule strengthened the capital
requirements applicable to banking
organizations 2 supervised by the
agencies by improving both the quality
and quantity of banking organizations’
regulatory capital, and increasing the
risk-sensitivity of the capital rule.3
The capital rule provides two
methodologies for determining risk-
weighted assets: (i) The standardized
approach and (ii) the advanced
approaches, which include both the
internal ratings-based approach and the
advanced measurement approach (the
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