INTERAGENCY PROPOSAL TO SIMPLIFY CAPITAL REQUIREMENTS FOR NON-COMPLEX BANKS AND THRIFT INSTITUTIONS.The federal bank and thrift regulatory agencies requested on November 3, 2000, public comment on an advance notice of proposed rulemaking A notice of proposed rulemaking or NPRM is issued by law when a regulatory agency of the United States Federal Government wishes to add, remove, or change a rule (or regulation) as part of the rulemaking process. Outside the USA. that considers the establishment of a simplified regulatory capital framework for non-complex institutions. The advance notice was published in the Federal Register (November 3, 2000). Comments are due February 1, 2001, to the Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (or OCC) was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States. , the Board of Governors of the Federal Reserve System Board of Governors of the Federal Reserve System The managing body of the Federal Reserve System, which sets policies on bank practices and the money supply. , the Federal Deposit Insurance Corporation Federal Deposit Insurance Corporation (FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $100,000. , or the Office of Thrift Supervision The Office of Thrift Supervision (OTS) was established as a bureau of the Treasury Department in August 1989 as part of a major Reorganization Plan of the thrift regulatory structure mandated by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) (12 U.S.C.A. . Banks and thrift institutions are required to maintain minimum levels of capital set by U.S. regulators under a framework established by the Basel Accord Basel Accord Agreement concluded among country representatives in 1988 in Switzerland to develop standardized risk-based capital requirements for banks across countries. in 1988. The U.S. and other regulators are currently revising the Accord to provide a more refined assessment of the capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. for large, complex, internationally active banks. The agencies seek comment on simplified capital frameworks for noncomplex banks and thrift institutions that would conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the underlying principles of a revised Basel Accord and maintain the principles of prudential supervision, yet would relieve unnecessary regulatory burden. The advance notice by the agencies observes that a large number of community banks and thrift institutions might benefit from a simpler capital framework that relieves some of the regulatory burden associated with regulatory capital calculations. The agencies suggest criteria that could be used to determine eligibility for a simplified capital framework, such as the nature of a bank's activities, its asset size, and its risk profile. In the advance notice, the agencies seek comment on possible minimum regulatory capital requirements for non-complex institutions, including a simplified risk-based ratio, a simple leverage ratio, or a leverage ratio modified to incorporate certain off-balance-sheet exposures. The advance notice solicits public comment on the agencies' preliminary views, particularly on the following issues: * Defining a non-complex institution * Identifying the factors for determining eligibility for a simplified capital framework * Setting an appropriate minimum capital threshold for non-complex institutions that maintains prudent capital levels and minimizes the regulatory burden associated with calculating that level * Considering additional options for measuring regulatory capital at non-complex institutions * Resolving the implementation issues associated with a simplified capital framework. |
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