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December 16, 2010 at 07:00 PM
Federal financial institution regulators are asking the public to discuss whether the Basel II risk-based capital standards provide enough flexibility to address exposures at nonbank financial companies.
The Office of the Comptroller of the Currency, the Federal Reserve System and the Federal Deposit Insurance Corp. are preparing to publish a notice of proposed rulemaking in the Federal Register.
The financial institution regulators want to change the “advanced risk-based capital adequacy standards” to mesh better with the provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act, and they want to change the general risk-based capital rules to mesh with act rules concerning weighting of the riskiness of classes of assets generally not held by depository institutions.
The advanced RBC rules are based in part on the Basel II proposals that were developed by the Basel Committee on Banking Supervision.
There is supposed to be a 3-year transition.
“For what specific types of exposures do commenters believe this treatment is appropriate?” officials ask about the new approach to RBC standards. “Does the proposal provide sufficient flexibility to address the exposures of depository institution holding companies and nonbank financial companies supervised by the Federal Reserve? If not, how should the proposal be changed to recognize the considerations outlined in this section?”
Officials note that the Dodd-Frank may bring some financial institutions that were not previously subject to consolidated RBC requirements under the supervision of the Federal Reserve System.
“Some of these companies are likely to be similar in nature to most depository institutions and bank holding companies subject to the general risk-based capital rules,” officials say. “Others, may be different, with exposure types and risks that were not contemplated when the general risk-based capital rules were developed.”
