Capital Is Contagious— The FDIC and OCC Approve Final Risk-based Capital Rules, and the Agencies Propose a Supplemental Leverage Capital Ratio for Large U.S. Banking Organizations


Today, July 9, the Federal Deposit Insurance Corporation (“FDIC”) and the Office of the Comptroller of the Currency (“OCC”) took two significant actions on the implementation of new regulatory capital requirements in the U.S. First, the FDIC, as expected but with one dissenting vote (Vice-Chairman Thomas Hoenig), and the OCC approved final rules (“Final Rules”) to implement revised regulatory capital requirements for U.S. banks that were proposed in June 2012, following the actions of the Federal Reserve Board taken on July 2. Second, the FDIC and OCC have proposed for comment a supplemental leverage capital ratio (“Proposal”) for the eight largest U.S. banking organizations that are deemed systemically significant, which would implement the leverage capital provision of the 2010-2011 revised regulatory capital accord (“Basel III”) adopted by the Basel Committee on Banking Supervision (“Basel Committee”) in the wake of the financial crisis. The Proposal, however, contains an important modification from the Basel Committee proposal, namely, a significantly more stringent leverage capital requirement.

Comments on the Proposal will be due 60 days after their publication in the Federal Register. The actual Proposal states that the leverage capital rules are being jointly proposed by the FDIC, the OCC and the Federal Reserve Board. In turn, the Federal Reserve Board, later in the day, also has announced its approval of the Proposal.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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