Federal Banking Regulators Propose Extension of Certain Capital Rules Treatment for Non-Advanced Approaches Banks

On August 22, 2017, the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation have issued a joint proposed rule to extend the current transitional capital rules treatment of certain regulatory capital deductions and risk weights and certain minority interest requirements for banks that are not subject to the advanced approaches capital rules (“Non-Advanced Approaches Banks”), which are scheduled to be replaced by a different treatment on January 1, 2018. Comments to this proposed rule will be accepted for 30 days after publication of the proposed rule in the Federal Register.

Specifically, for Non-Advanced Approaches Banks, the proposed rule will extend the current regulatory capital treatment of: (i) mortgage servicing assets; (ii) deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks; (iii) significant investments in the capital of unconsolidated financial institutions in the form of common stock; (iv) non-significant investments in the capital of unconsolidated financial institutions; (v) significant investments in the capital of unconsolidated financial institutions that are not in the form of common stock; and (vi) common equity tier 1 minority interest, tier 1 minority interest, and total capital minority interest exceeding the capital rules’ minority interest limitations.

The banking regulators issued this proposed rule in preparation for a separate proposed rule that they expect to issue in the coming months to simplify the regulatory capital requirements and burdens, particularly for community banks.

Author

  • Solomon Maman

    Solomon has over a decade of experience representing financial institutions, real estate investors and privately owned business entities. Solomon concentrates his practice in the areas of banking, consumer financial services, real estate, business law and related litigation and appellate practice.

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