3867Federal Register / Vol. 83, No. 18 / Friday, January 26, 2018 / Notices
1 See 12 U.S.C. 1831n(c). This report must be
published in the Federal Register. See 12 U.S.C.
1831n(c)(3).
comments, without edit, including any
personal information the commenter
provides, to www.regulations.gov as
described in the system of records
notice (DOT/ALL– 14 FDMS), which
can be reviewed at www.dot.gov/
privacy.
Services for Individuals with
Disabilities: The public meeting will be
physically accessible to people with
disabilities. Individuals requiring
accommodations, such as sign language
interpretation or other ancillary aids, are
asked to notify Cheryl Whetsel at
cheryl.whetsel@dot.gov.
FOR FURTHER INFORMATION CONTACT: For
information about the meeting, contact
Cheryl Whetsel by phone at 202–366–
4431 or by email at cheryl.whetsel@
dot.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The VIS Working Group is a recently
created advisory committee established
in accordance with Section 10 of the
Protecting our Infrastructure of
Pipelines and Enhancing Safety Act of
2016 (Pub. L. 114–183), the Federal
Advisory Committee Act of 1972 (5
U.S.C., App. 2, as amended), and 41
CFR 102–3.50(a).
II. Meeting Details and Agenda
The VIS Working Group agenda will
include briefings on topics such as
mandate requirements, integrity
management, data types and tools, in-
line inspection repair and other direct
assessment methods, geographic
information system implementation,
subcommittee considerations, lessons
learned, examples of existing
information-sharing systems, safety
management systems, and more. As part
of its work, the committee will
ultimately provide recommendations to
the Secretary, as required and
specifically outlined in Section 10 of
Public Law 114–183, addressing:
(a) The need for, and the
identification of, a system to ensure that
dig verification data are shared with in-
line inspection operators to the extent
consistent with the need to maintain
proprietary and security-sensitive data
in a confidential manner to improve
pipeline safety and inspection
technology;
(b) Ways to encourage the exchange of
pipeline inspection information and the
development of advanced pipeline
inspection technologies and enhanced
risk analysis;
(c) Opportunities to share data,
including dig verification data between
operators of pipeline facilities and in-
line inspector vendors to expand
knowledge of the advantages and
disadvantages of the different types of
in-line inspection technology and
methodologies;
(d) Options to create a secure system
that protects proprietary data while
encouraging the exchange of pipeline
inspection information and the
development of advanced pipeline
inspection technologies and enhanced
risk analysis;
(e) Means and best practices for the
protection of safety and security-
sensitive information and proprietary
information; and
(f) Regulatory, funding, and legal
barriers to sharing the information
described in paragraphs (a) through (d).
The Secretary will publish the VIS
Working Group’s recommendations on a
publicly available DOT website and in
the docket. The VIS Working Group will
fulfill its purpose once its
recommendations are published online.
PHMSA will publish the agenda on the
PHMSA meeting page https://
primis.phmsa.dot.gov/meetings/
MtgHome.mtg?mtg=130, once it is
finalized.
Issued in Washington, DC, on January 23,
2018, under authority delegated in 49 CFR
1.97.
Alan K. Mayberry,
Associate Administrator for Pipeline Safety.
[FR Doc. 2018–01476 Filed 1–25–18; 8:45 am]
BILLING CODE 4910–60–P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE
CORPORATION
Joint Report: Differences in
Accounting and Capital Standards
Among the Federal Banking Agencies
as of September 30, 2017; Report to
Congressional Committees
AGENCY: Office of the Comptroller of the
Currency (OCC), Treasury; Board of
Governors of the Federal Reserve
System (Board); and Federal Deposit
Insurance Corporation (FDIC).
ACTION: Report to Congressional
Committees.
SUMMARY: The OCC, the Board, and the
FDIC (collectively, the agencies) have
prepared this report pursuant to section
37(c) of the Federal Deposit Insurance
Act. Section 37(c) requires the agencies
to jointly submit an annual report to the
Committee on Financial Services of the
U.S. House of Representatives and to the
Committee on Banking, Housing, and
Urban Affairs of the U.S. Senate
describing differences among the
accounting and capital standards used
by the agencies. Section 37(c) requires
that this report be published in the
Federal Register.
FOR FURTHER INFORMATION CONTACT:
OCC: Benjamin Pegg, Risk Expert,
Capital Policy, (202) 649–7146, Office of
the Comptroller of the Currency, 400 7th
Street SW, Washington, DC 20219.
Board: Elizabeth MacDonald,
Manager, Capital and Regulatory Policy,
(202) 475–6316, Division of Supervision
and Regulation, Board of Governors of
the Federal Reserve System, 20th Street
and Constitution Avenue NW,
Washington, DC 20551.
FDIC: Benedetto Bosco, Chief, Capital
Policy Section, (202) 898–6853, Division
of Risk Management Supervision,
Federal Deposit Insurance Corporation,
550 17th Street NW, Washington, DC
20429.
SUPPLEMENTARY INFORMATION: The text of
the report follows:
Report to the Committee on Financial
Services of the U.S. House of
Representatives and to the Committee
on Banking, Housing, and Urban
Affairs of the U.S. Senate Regarding
Differences in Accounting and Capital
Standards Among the Federal Banking
Agencies
Introduction
Under section 37(c) of the Federal
Deposit Insurance Act (section 37(c)),
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) must jointly submit an annual
report to the Committee on Financial
Services of the U.S. House of
Representatives and the Committee on
Banking, Housing, and Urban Affairs of
the U.S. Senate that describes any
differences among the accounting and
capital standards established by the
agencies for insured depository
institutions (institutions).1
In accordance with section 37(c), the
agencies are submitting this joint report,
which covers differences among their
accounting or capital standards existing
as of September 30, 2017, applicable to
institutions. In recent years, the
agencies have acted together to
harmonize their accounting and capital
standards and eliminate as many
VerDate Sep<11>2014 20:14 Jan 25, 2018 Jkt 244001 PO 00000 Frm 00195 Fmt 4703 Sfmt 4703 E:\FR\FM\26JAN1.SGM 26JAN1
daltland on DSKBBV9HB2PROD with NOTICES
1 See 12 U.S.C. 1831n(c). This report must be
published in the Federal Register. See 12 U.S.C.
1831n(c)(3).
comments, without edit, including any
personal information the commenter
provides, to www.regulations.gov as
described in the system of records
notice (DOT/ALL– 14 FDMS), which
can be reviewed at www.dot.gov/
privacy.
Services for Individuals with
Disabilities: The public meeting will be
physically accessible to people with
disabilities. Individuals requiring
accommodations, such as sign language
interpretation or other ancillary aids, are
asked to notify Cheryl Whetsel at
cheryl.whetsel@dot.gov.
FOR FURTHER INFORMATION CONTACT: For
information about the meeting, contact
Cheryl Whetsel by phone at 202–366–
4431 or by email at cheryl.whetsel@
dot.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The VIS Working Group is a recently
created advisory committee established
in accordance with Section 10 of the
Protecting our Infrastructure of
Pipelines and Enhancing Safety Act of
2016 (Pub. L. 114–183), the Federal
Advisory Committee Act of 1972 (5
U.S.C., App. 2, as amended), and 41
CFR 102–3.50(a).
II. Meeting Details and Agenda
The VIS Working Group agenda will
include briefings on topics such as
mandate requirements, integrity
management, data types and tools, in-
line inspection repair and other direct
assessment methods, geographic
information system implementation,
subcommittee considerations, lessons
learned, examples of existing
information-sharing systems, safety
management systems, and more. As part
of its work, the committee will
ultimately provide recommendations to
the Secretary, as required and
specifically outlined in Section 10 of
Public Law 114–183, addressing:
(a) The need for, and the
identification of, a system to ensure that
dig verification data are shared with in-
line inspection operators to the extent
consistent with the need to maintain
proprietary and security-sensitive data
in a confidential manner to improve
pipeline safety and inspection
technology;
(b) Ways to encourage the exchange of
pipeline inspection information and the
development of advanced pipeline
inspection technologies and enhanced
risk analysis;
(c) Opportunities to share data,
including dig verification data between
operators of pipeline facilities and in-
line inspector vendors to expand
knowledge of the advantages and
disadvantages of the different types of
in-line inspection technology and
methodologies;
(d) Options to create a secure system
that protects proprietary data while
encouraging the exchange of pipeline
inspection information and the
development of advanced pipeline
inspection technologies and enhanced
risk analysis;
(e) Means and best practices for the
protection of safety and security-
sensitive information and proprietary
information; and
(f) Regulatory, funding, and legal
barriers to sharing the information
described in paragraphs (a) through (d).
The Secretary will publish the VIS
Working Group’s recommendations on a
publicly available DOT website and in
the docket. The VIS Working Group will
fulfill its purpose once its
recommendations are published online.
PHMSA will publish the agenda on the
PHMSA meeting page https://
primis.phmsa.dot.gov/meetings/
MtgHome.mtg?mtg=130, once it is
finalized.
Issued in Washington, DC, on January 23,
2018, under authority delegated in 49 CFR
1.97.
Alan K. Mayberry,
Associate Administrator for Pipeline Safety.
[FR Doc. 2018–01476 Filed 1–25–18; 8:45 am]
BILLING CODE 4910–60–P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE
CORPORATION
Joint Report: Differences in
Accounting and Capital Standards
Among the Federal Banking Agencies
as of September 30, 2017; Report to
Congressional Committees
AGENCY: Office of the Comptroller of the
Currency (OCC), Treasury; Board of
Governors of the Federal Reserve
System (Board); and Federal Deposit
Insurance Corporation (FDIC).
ACTION: Report to Congressional
Committees.
SUMMARY: The OCC, the Board, and the
FDIC (collectively, the agencies) have
prepared this report pursuant to section
37(c) of the Federal Deposit Insurance
Act. Section 37(c) requires the agencies
to jointly submit an annual report to the
Committee on Financial Services of the
U.S. House of Representatives and to the
Committee on Banking, Housing, and
Urban Affairs of the U.S. Senate
describing differences among the
accounting and capital standards used
by the agencies. Section 37(c) requires
that this report be published in the
Federal Register.
FOR FURTHER INFORMATION CONTACT:
OCC: Benjamin Pegg, Risk Expert,
Capital Policy, (202) 649–7146, Office of
the Comptroller of the Currency, 400 7th
Street SW, Washington, DC 20219.
Board: Elizabeth MacDonald,
Manager, Capital and Regulatory Policy,
(202) 475–6316, Division of Supervision
and Regulation, Board of Governors of
the Federal Reserve System, 20th Street
and Constitution Avenue NW,
Washington, DC 20551.
FDIC: Benedetto Bosco, Chief, Capital
Policy Section, (202) 898–6853, Division
of Risk Management Supervision,
Federal Deposit Insurance Corporation,
550 17th Street NW, Washington, DC
20429.
SUPPLEMENTARY INFORMATION: The text of
the report follows:
Report to the Committee on Financial
Services of the U.S. House of
Representatives and to the Committee
on Banking, Housing, and Urban
Affairs of the U.S. Senate Regarding
Differences in Accounting and Capital
Standards Among the Federal Banking
Agencies
Introduction
Under section 37(c) of the Federal
Deposit Insurance Act (section 37(c)),
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) must jointly submit an annual
report to the Committee on Financial
Services of the U.S. House of
Representatives and the Committee on
Banking, Housing, and Urban Affairs of
the U.S. Senate that describes any
differences among the accounting and
capital standards established by the
agencies for insured depository
institutions (institutions).1
In accordance with section 37(c), the
agencies are submitting this joint report,
which covers differences among their
accounting or capital standards existing
as of September 30, 2017, applicable to
institutions. In recent years, the
agencies have acted together to
harmonize their accounting and capital
standards and eliminate as many
VerDate Sep<11>2014 20:14 Jan 25, 2018 Jkt 244001 PO 00000 Frm 00195 Fmt 4703 Sfmt 4703 E:\FR\FM\26JAN1.SGM 26JAN1
daltland on DSKBBV9HB2PROD with NOTICES
3868 Federal Register / Vol. 83, No. 18 / Friday, January 26, 2018 / Notices
2 See 78 FR 62018 (October 11, 2013) (final rule
issued by the OCC and the Board); 78 FR 55340
(September 10, 2013) (interim final rule issued by
the FDIC). The FDIC later issued its final rule in 79
FR 20754 (April 14, 2014). The agencies’ respective
capital rules are at 12 CFR part 3 (OCC), 12 CFR
part 217 (Board), and 12 CFR part 324 (FDIC). These
capital rules apply to institutions, as well as to
certain bank holding companies, and savings and
loan holding companies. 12 CFR 217.1(c).
3 The capital rules reflect the scope of each
agency’s regulatory jurisdiction. For example, the
Board’s capital rule includes requirements related
to bank holding companies, savings and loan
holding companies, and state member banks, while
the FDIC’s capital rule includes provisions for state
nonmember banks and state savings associations,
and the OCC’s capital rule includes provisions for
national banks and federal savings associations.
4 Generally, these are institutions, bank holding
companies, and savings and loan holding
companies that are subject to the capital rules with
total consolidated assets of $250 billion or more or
total consolidated on-balance sheet foreign
exposures of at least $10 billion.
5 Under the auspices of the Federal Financial
Institutions Examination Council, the agencies have
developed the Consolidated Reports of Condition
and Income, or ‘‘Call Report,’’ where institutions
report their respective capital and leverage ratios.
6 Certain minor differences, such as terminology
specific to each agency for the institutions that they
supervise, are not included in this report.
7 See 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); 12
CFR 324.2 (FDIC).
8 Id.
9 12 CFR 217.2. The Board’s rule separately
defines policy loan and separate account. Id.
10 78 FR 62127 (October 11, 2013).
11 See 12 U.S.C. 1831a.
12 12 CFR 3.2 (OCC), 12 CFR 217.2 (Board), 12
CFR 324.2 (FDIC).
13 12 CFR 217.2.
14 12 CFR 3.20 (OCC); 12 CFR 217.20 (Board); 12
CFR 324.20 (FDIC).
15 12 CFR 217.20.
16 Id.
17 12 CFR 324.22(a)(9).
differences as possible. As of September
30, 2017, the agencies have not
identified any material differences
among themselves in the accounting
standards applicable to institutions.
In 2013, the agencies revised the risk-
based and leverage capital rules for
institutions (capital rules),2 which
harmonized the agencies’ capital rules
in a comprehensive manner.3 Only a
few differences remain, which are
statutorily mandated for certain
categories of institutions or which
reflect certain technical, generally
nonmaterial differences among the
agencies’ capital rules.
As revised in 2013, the agencies’
capital rules generally have increased
the quantity and quality of regulatory
capital. For example, these revised
capital rules include a minimum
common equity tier 1 capital ratio of 4.5
percent, raise the minimum tier 1
capital ratio from 4 percent to 6 percent,
and establish additional capital buffer
amounts for institutions: The capital
conservation buffer, and, for advanced
approaches institutions,4 the
countercyclical capital buffer. These
revised capital rules also require all
institutions to meet a 4 percent
minimum leverage ratio measured as an
institution’s tier 1 capital to average
total consolidated assets (generally
applicable leverage ratio) and require
advanced approaches institutions to
meet a 3 percent minimum
supplementary leverage ratio, measured
as an institution’s tier 1 capital to the
sum of on- and off-balance sheet
exposures (supplementary leverage
ratio).5
Differences in Capital Standards Among
the Federal Banking Agencies
Below are summaries of the technical
differences remaining among the capital
standards of the agencies’ capital rules.6
Definitions
The agencies’ capital rules largely
contain the same definitions.7 The
differences that exist generally serve to
accommodate the different scope of
jurisdiction of each agency. Set forth
below are two definitional differences
among the agencies. Each agency’s
definitional provisions provide that a
‘‘corporate exposure is an exposure to a
company that is not’’ one of 11 separate
other types of exposures.8 The Board’s
capital rule provides that two additional
items are not corporate exposures: a
policy loan and a separate account.9
Unlike the OCC’s and FDIC’s capital
rules, the Board’s capital rule covers
bank holding companies and savings
and loan holding companies, which
may engage in insurance underwriting
activities 10 in which institutions cannot
engage,11 and these additional items in
the Board’s capital rule are relevant for
insurance underwriting activities. Thus,
these additional items are only relevant
to bank holding companies and savings
and loan holding companies under the
terms of the Board’s capital rule.
The agencies’ capital rules also have
differing definitions of a pre-sold
construction loan. All three agencies
provide that a pre-sold construction
loan means any ‘‘one-to-four family
residential construction loan to a
builder that meets the requirements of
section 618(a)(1) or (2) of the Resolution
Trust Corporation Refinancing,
Restructuring, and Improvement Act of
1991 (12 U.S.C. 1831n), and, in addition
to other criteria, the purchaser has not
terminated the contract.’’ 12 The Board’s
definition provides further clarification
that, if a purchaser has terminated the
contract, the institution must
immediately apply a 100 percent risk
weight to the loan and report the revised
risk weight in the next quarterly Call
Report.13 Similarly, if the purchaser has
terminated the contract, the OCC and
FDIC capital rules would immediately
disqualify the loan from receiving a 50
percent risk weight, and would apply a
100 percent risk weight to the loan. The
change in risk weight would be reflected
in the next quarterly Call Report. Thus,
the minor wording difference between
the agencies should have no practical
consequence.
Capital Components and Eligibility
Criteria for Regulatory Capital
Instruments
While the capital rules generally
provide uniform eligibility criteria for
regulatory capital instruments, there are
two textual differences among the
agencies’ capital rules. First, the OCC’s
and FDIC’s capital rules require that
additional tier 1 capital instruments not
be subject to a ‘‘limit’’ imposed by the
contractual terms governing the
instrument, while the Board’s capital
rule does not include this
requirement.14 Second, only the Board’s
capital rule states that ‘‘[s]tate member
banks are subject to certain other legal
restrictions on reductions in capital
resulting from cash dividends,
including out of the capital surplus
account, under 12 U.S.C. 324 and 12
CFR 208.5.’’ 15 The Board’s capital rule
also includes similar language relating
to distributions on additional tier 1
capital instruments.16 However, the
agencies apply the criteria for
determining eligibility of regulatory
capital instruments to ensure consistent
outcomes.
Capital Deductions
There is a technical difference
between the FDIC’s capital rule and the
OCC’s and Board’s capital rules with
regard to an explicit requirement for
deduction of examiner-identified losses.
The agencies require their examiners to
determine whether their respective
supervised institutions have
appropriately identified losses. The
FDIC’s capital rule, however, explicitly
requires FDIC-supervised institutions to
deduct identified losses from common
equity tier 1 capital elements, to the
extent that the institution’s common
equity tier 1 capital would have been
reduced if the appropriate accounting
entries had been recorded.17 Generally,
identified losses are those items that an
examiner determines to be chargeable
against income, capital, or general
valuation allowances.
For example, identified losses may
include, among other items, assets
VerDate Sep<11>2014 20:14 Jan 25, 2018 Jkt 244001 PO 00000 Frm 00196 Fmt 4703 Sfmt 4703 E:\FR\FM\26JAN1.SGM 26JAN1
daltland on DSKBBV9HB2PROD with NOTICES
2 See 78 FR 62018 (October 11, 2013) (final rule
issued by the OCC and the Board); 78 FR 55340
(September 10, 2013) (interim final rule issued by
the FDIC). The FDIC later issued its final rule in 79
FR 20754 (April 14, 2014). The agencies’ respective
capital rules are at 12 CFR part 3 (OCC), 12 CFR
part 217 (Board), and 12 CFR part 324 (FDIC). These
capital rules apply to institutions, as well as to
certain bank holding companies, and savings and
loan holding companies. 12 CFR 217.1(c).
3 The capital rules reflect the scope of each
agency’s regulatory jurisdiction. For example, the
Board’s capital rule includes requirements related
to bank holding companies, savings and loan
holding companies, and state member banks, while
the FDIC’s capital rule includes provisions for state
nonmember banks and state savings associations,
and the OCC’s capital rule includes provisions for
national banks and federal savings associations.
4 Generally, these are institutions, bank holding
companies, and savings and loan holding
companies that are subject to the capital rules with
total consolidated assets of $250 billion or more or
total consolidated on-balance sheet foreign
exposures of at least $10 billion.
5 Under the auspices of the Federal Financial
Institutions Examination Council, the agencies have
developed the Consolidated Reports of Condition
and Income, or ‘‘Call Report,’’ where institutions
report their respective capital and leverage ratios.
6 Certain minor differences, such as terminology
specific to each agency for the institutions that they
supervise, are not included in this report.
7 See 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); 12
CFR 324.2 (FDIC).
8 Id.
9 12 CFR 217.2. The Board’s rule separately
defines policy loan and separate account. Id.
10 78 FR 62127 (October 11, 2013).
11 See 12 U.S.C. 1831a.
12 12 CFR 3.2 (OCC), 12 CFR 217.2 (Board), 12
CFR 324.2 (FDIC).
13 12 CFR 217.2.
14 12 CFR 3.20 (OCC); 12 CFR 217.20 (Board); 12
CFR 324.20 (FDIC).
15 12 CFR 217.20.
16 Id.
17 12 CFR 324.22(a)(9).
differences as possible. As of September
30, 2017, the agencies have not
identified any material differences
among themselves in the accounting
standards applicable to institutions.
In 2013, the agencies revised the risk-
based and leverage capital rules for
institutions (capital rules),2 which
harmonized the agencies’ capital rules
in a comprehensive manner.3 Only a
few differences remain, which are
statutorily mandated for certain
categories of institutions or which
reflect certain technical, generally
nonmaterial differences among the
agencies’ capital rules.
As revised in 2013, the agencies’
capital rules generally have increased
the quantity and quality of regulatory
capital. For example, these revised
capital rules include a minimum
common equity tier 1 capital ratio of 4.5
percent, raise the minimum tier 1
capital ratio from 4 percent to 6 percent,
and establish additional capital buffer
amounts for institutions: The capital
conservation buffer, and, for advanced
approaches institutions,4 the
countercyclical capital buffer. These
revised capital rules also require all
institutions to meet a 4 percent
minimum leverage ratio measured as an
institution’s tier 1 capital to average
total consolidated assets (generally
applicable leverage ratio) and require
advanced approaches institutions to
meet a 3 percent minimum
supplementary leverage ratio, measured
as an institution’s tier 1 capital to the
sum of on- and off-balance sheet
exposures (supplementary leverage
ratio).5
Differences in Capital Standards Among
the Federal Banking Agencies
Below are summaries of the technical
differences remaining among the capital
standards of the agencies’ capital rules.6
Definitions
The agencies’ capital rules largely
contain the same definitions.7 The
differences that exist generally serve to
accommodate the different scope of
jurisdiction of each agency. Set forth
below are two definitional differences
among the agencies. Each agency’s
definitional provisions provide that a
‘‘corporate exposure is an exposure to a
company that is not’’ one of 11 separate
other types of exposures.8 The Board’s
capital rule provides that two additional
items are not corporate exposures: a
policy loan and a separate account.9
Unlike the OCC’s and FDIC’s capital
rules, the Board’s capital rule covers
bank holding companies and savings
and loan holding companies, which
may engage in insurance underwriting
activities 10 in which institutions cannot
engage,11 and these additional items in
the Board’s capital rule are relevant for
insurance underwriting activities. Thus,
these additional items are only relevant
to bank holding companies and savings
and loan holding companies under the
terms of the Board’s capital rule.
The agencies’ capital rules also have
differing definitions of a pre-sold
construction loan. All three agencies
provide that a pre-sold construction
loan means any ‘‘one-to-four family
residential construction loan to a
builder that meets the requirements of
section 618(a)(1) or (2) of the Resolution
Trust Corporation Refinancing,
Restructuring, and Improvement Act of
1991 (12 U.S.C. 1831n), and, in addition
to other criteria, the purchaser has not
terminated the contract.’’ 12 The Board’s
definition provides further clarification
that, if a purchaser has terminated the
contract, the institution must
immediately apply a 100 percent risk
weight to the loan and report the revised
risk weight in the next quarterly Call
Report.13 Similarly, if the purchaser has
terminated the contract, the OCC and
FDIC capital rules would immediately
disqualify the loan from receiving a 50
percent risk weight, and would apply a
100 percent risk weight to the loan. The
change in risk weight would be reflected
in the next quarterly Call Report. Thus,
the minor wording difference between
the agencies should have no practical
consequence.
Capital Components and Eligibility
Criteria for Regulatory Capital
Instruments
While the capital rules generally
provide uniform eligibility criteria for
regulatory capital instruments, there are
two textual differences among the
agencies’ capital rules. First, the OCC’s
and FDIC’s capital rules require that
additional tier 1 capital instruments not
be subject to a ‘‘limit’’ imposed by the
contractual terms governing the
instrument, while the Board’s capital
rule does not include this
requirement.14 Second, only the Board’s
capital rule states that ‘‘[s]tate member
banks are subject to certain other legal
restrictions on reductions in capital
resulting from cash dividends,
including out of the capital surplus
account, under 12 U.S.C. 324 and 12
CFR 208.5.’’ 15 The Board’s capital rule
also includes similar language relating
to distributions on additional tier 1
capital instruments.16 However, the
agencies apply the criteria for
determining eligibility of regulatory
capital instruments to ensure consistent
outcomes.
Capital Deductions
There is a technical difference
between the FDIC’s capital rule and the
OCC’s and Board’s capital rules with
regard to an explicit requirement for
deduction of examiner-identified losses.
The agencies require their examiners to
determine whether their respective
supervised institutions have
appropriately identified losses. The
FDIC’s capital rule, however, explicitly
requires FDIC-supervised institutions to
deduct identified losses from common
equity tier 1 capital elements, to the
extent that the institution’s common
equity tier 1 capital would have been
reduced if the appropriate accounting
entries had been recorded.17 Generally,
identified losses are those items that an
examiner determines to be chargeable
against income, capital, or general
valuation allowances.
For example, identified losses may
include, among other items, assets
VerDate Sep<11>2014 20:14 Jan 25, 2018 Jkt 244001 PO 00000 Frm 00196 Fmt 4703 Sfmt 4703 E:\FR\FM\26JAN1.SGM 26JAN1
daltland on DSKBBV9HB2PROD with NOTICES