Regulatory Capital Rule: Simplifications to the Capital Rule Pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996
|Agency:||FDIC, Federal Reserve, OCC|
|Status:||Final rule, effective date, early adoption|
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) are adopting a final rule (final rule) to simplify certain aspects of the capital rule. The final rule is responsive to the agencies’ March 2017 report to Congress pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996, in which the agencies committed to meaningfully reduce regulatory burden, especially on community banking organizations. The key elements of the final rule apply solely to banking organizations that are not subject to the advanced approaches capital rule (non-advanced approaches banking organizations). Under the final rule, non-advanced approaches banking organizations will be subject to simpler regulatory capital requirements for mortgage servicing assets, certain deferred tax assets arising from temporary differences, and investments in the capital of unconsolidated financial institutions than those currently applied. The final rule also simplifies, for non-advanced approaches banking organizations, the calculation for the amount of capital issued by a consolidated subsidiary of a banking organization and held by third parties (sometimes referred to as a minority interest) that is includable in regulatory capital. In addition, the final rule makes technical amendments to, and clarifies certain aspects of, the agencies’ capital rule for both non-advanced approaches banking organizations and advanced approaches banking organizations (technical amendments). Revisions to the definition of high-volatility commercial real estate exposure in the agencies’ capital rule are being addressed in a separate rulemaking.
Revised: 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) are adopting a final rule that permits insured depository institutions and depository institution holding companies not subject to the advanced approaches capital rule to implement certain provisions of the final rule titled Regulatory Capital: Simplifications to the Capital Rule Pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996, which was issued by the agencies in July 22, 2019, (Capital Simplifications Final Rule) on Jan. 1, 2020, rather than April 1, 2020, as initially provided. Consistent with this approach, the transitions provisions of the regulatory capital rule are being amended to provide that banking organizations not subject to the advanced approaches capital rule will be permitted to implement the Capital Simplifications Final Rule as of its revised effective date in the quarter beginning Jan. 1, 2020, or to wait until the quarter beginning April 1, 2020.
|FR Doc:||2019-15131; 2019-23467 (revised to permit early adoption)|
|Date proposed:||Sept. 27, 2017|
|Comments due date:||
|Final rule effective date:||
The final rule was issued with an Oct. 1, 2019, effective date. The rule revision has an effective Jan. 1, 2020. The effective date for the amendments to 12 CFR 3.21, 3.22, 3.300(b) and (d), 217.21, 217.22, 217.300(b) and (d), 324.21, 324.22, and 324.300(b) and (d) published on July 22, 2019 (84 FR 35234), is changed from April 1, 2020, to Jan. 1, 2020.
|Rule compliance date:|
|Agency release:||Agencies propose simplifying regulatory capital rules|
|Related Reg Report item(s):|