Proposed revisions to 1998 Basel Capital Accord (Basel I).The Federal Reserve Board decided on October 6, 2005, to request public comment on proposed revisions to the U.S. risk-based capital standards for banking organizations. These current standards are based upon the 1988 Basel Capital Accord, also known as Basel I Basel I is the term which refers to a round of deliberations by central bankers from around the world, and in 1988, the Basel Committee (BCBS) in Basel, Switzerland, published a set of minimal capital requirements for banks. . The proposed revisions should more closely align risk-based capital requirements Risk-Based Capital Requirement A stated requirement of liquid reserves placed upon banks and institutions that deal in risky ventures. Notes: These requirements exist for the protection of investors who hold an interest in these types of businesses. with the risk inherent in various exposures and could mitigate competitive inequalities that may arise as new capital rules, known as Basel II, are implemented for the most complex internationally active banking organizations. The modifications that the Board, 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 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. , and 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. are considering would apply to banks, bank holding companies, and savings associations. The modifications will be set forth in an advanced 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. to be published shortly in the Federal Register. In considering possible revisions, the agencies are seeking to enhance risk sensitivity without undue complexity or regulatory burden. Specifically, the agencies are soliciting comment on: * increasing the number of risk-weight categories, * permitting greater use of external ratings as an indicator of credit risk for exposures for purposes of determining the appropriate risk weight, * expanding the types of guarantees and collateral that may be recognized, * modifying the risk weights associated with one-to-four family residential mortgages, * applying credit conversion factors to certain types of commitments, as well as the appropriate risk-based capital treatment of certain securitizations with early-amortization provisions, and * modifying the risk weights for loans that are ninety days or more past due or in non-accrual status, as well as for certain commercial real estate exposures, and other retail and commercial exposures. |
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