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Martin J. Gruenberg
Chairman, Federal Deposit Insurance Corporation
Notice of Proposed Rulemaking: Simplification to the Capital Rule Pursuant to the Economic
Growth and Regulatory Paperwork Reduction Act of 1996
FDIC Board Meeting
September 27, 2017
Thank you very much for that overview.
This proposal stems from the recent EGRPRA review by the banking agencies, which
focused particularly on reducing regulatory burden on community banks. Through the EGRPRA
review and the accompanying industry outreach, a number of commenters identified areas of the
existing capital rules that could benefit from simplification.
This notice of proposed rulemaking is intended to simplify and clarify a number of the
more complex aspects of the agencies’ capital rules, including the definition of capital, the
treatment of capital deductions, and the treatment of so-called High Volatility Commercial Real
Estate, or HVCRE.
The HVCRE issue was the single most commented-on provision of the agencies’ capital
rules during the EGRPRA process. This proposal aims to strike a balance between reducing
complexity on the one hand, and continuing to ensure appropriate capital requirements for banks’
construction lending activities on the other. We look forward to comments on how well we have
struck this balance.
Martin J. Gruenberg
Chairman, Federal Deposit Insurance Corporation
Notice of Proposed Rulemaking: Simplification to the Capital Rule Pursuant to the Economic
Growth and Regulatory Paperwork Reduction Act of 1996
FDIC Board Meeting
September 27, 2017
Thank you very much for that overview.
This proposal stems from the recent EGRPRA review by the banking agencies, which
focused particularly on reducing regulatory burden on community banks. Through the EGRPRA
review and the accompanying industry outreach, a number of commenters identified areas of the
existing capital rules that could benefit from simplification.
This notice of proposed rulemaking is intended to simplify and clarify a number of the
more complex aspects of the agencies’ capital rules, including the definition of capital, the
treatment of capital deductions, and the treatment of so-called High Volatility Commercial Real
Estate, or HVCRE.
The HVCRE issue was the single most commented-on provision of the agencies’ capital
rules during the EGRPRA process. This proposal aims to strike a balance between reducing
complexity on the one hand, and continuing to ensure appropriate capital requirements for banks’
construction lending activities on the other. We look forward to comments on how well we have
struck this balance.
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To facilitate comment on the NPR, particularly by community banks, we are also
providing a number of tools to accompany the notice itself, including a summary of the NPR
targeted to community banks and an estimator tool that will allow an FDIC-supervised bank to
evaluate the potential impact of the proposal on the institution. We also are planning a national
call with bankers to address their questions once the industry has had an opportunity to review
the proposal. We welcome comments on all aspects of the proposal.
Going forward, I think it is also appropriate for the banking agencies to consider more
comprehensive approaches to simplify the existing regulatory capital rules for community banks.
In that regard, I encourage commenters to respond to questions in the NPR on more
comprehensive approaches to the simplification of the capital rules as they apply to community
banks.
Finally, I would like to thank the FDIC staff for their work on this proposed rule, as well
as the staff of the OCC and the Federal Reserve, for the cooperative interagency effort.
To facilitate comment on the NPR, particularly by community banks, we are also
providing a number of tools to accompany the notice itself, including a summary of the NPR
targeted to community banks and an estimator tool that will allow an FDIC-supervised bank to
evaluate the potential impact of the proposal on the institution. We also are planning a national
call with bankers to address their questions once the industry has had an opportunity to review
the proposal. We welcome comments on all aspects of the proposal.
Going forward, I think it is also appropriate for the banking agencies to consider more
comprehensive approaches to simplify the existing regulatory capital rules for community banks.
In that regard, I encourage commenters to respond to questions in the NPR on more
comprehensive approaches to the simplification of the capital rules as they apply to community
banks.
Finally, I would like to thank the FDIC staff for their work on this proposed rule, as well
as the staff of the OCC and the Federal Reserve, for the cooperative interagency effort.