The U.S. Board of Governors of the Federal Reserve System, U.S. Office of the Comptroller of the Currency and U.S. Federal Deposit Insurance Corporation announced proposed revisions to the agencies’ regulatory capital rules to reflect changes to U.S. generally accepted accounting principles regarding credit losses.  The proposed revisions will identify which of the new credit loss allowances will be eligible for inclusion in a financial institution’s regulatory capital.  The proposal will further provide for an optional transition period that will allow financial institutions to phase in the adverse effects on certain regulatory capital components over a three-year period.  The proposal also seeks to amend the stress testing regulations to allow covered institutions that have adopted these changes to U.S. GAAP to not include the effects from adopting this new standard until the 2020 stress test cycle.  The proposed amendment will also make conforming changes, including with respect to certain definitions, disclosures and regulatory reporting forms.  Comments to the proposal are due 60 days from the proposal’s publication in the Federal Register.

View ​full text of the agencies’ proposal.