On August 22, 2017, the Office of the Comptroller of the Currency (the “OCC”), the Federal Deposit Insurance Corporation (the “FDIC”) and the Board of Governors of the Federal Reserve System (the “FRB”) (the OCC, FDIC and FRB collectively, the “Agencies”) issued a proposed rule that would delay the effectiveness of certain rules which were designed to implement the Basel III capital standards (the “Proposed Rule”). Specifically, under the Proposed Rule, the Agencies are proposing to freeze certain transition and phase-in periods of Basel III capital standards relating to mortgage servicing rights, certain deferred tax assets and investments in certain unconsolidated financial institutions. The Agencies have specifically stated in the Proposed Rule that they expect in the near term to issue a separate proposal to simplify the regulatory capital treatment of the foregoing items. As a result, the Proposed Rule will allow most banks to avoid the burden of changing the capital treatment of these items as of January 1, 2018 while the Agencies draft the separate proposal to simplify the capital treatment of these items.
In 2010, in the depths of the recession, Congress mandated enhanced bank capital requirements as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Specifically, the Collins Amendment to the Dodd-Frank Act amended the definition of capital and established minimum capital and leverage requirements for bank subsidiaries, bank holding companies and systemically important nonbank financial companies.
Continue Reading It’s Not Much, but It’s a Start: The Regulators Freeze Certain Capital Requirements