Banking regulators in the United States are seeking comment proposed rulemaking that would implement new risk-based capital requirements in the U.S. for large, internationally active banking organizations.
The notice details the agencies’ plans for implementing the Basel Committee on Banking Supervision’s new capital accord (known as Basel II) that was issued in 2004.
The Federal Reserve Board, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision first adopted risk-based capital standards in 1989. Those standards were based on the Basel Capital Accord, originally issued in 1988 (Basel I). The Basel II rules would replace rules implementing Basel I. The proposed framework would be mandatory for large, internationally active banking organizations and optional for others.
In March of this year, the Fed released a preliminary draft of the Basel II rules. The latest version includes some changes from the March draft. For example, the agencies have responded to certain requests from the industry to seek comment on alternative risk-based capital approaches and have clarified that in evaluating credit risk, banking organizations should not rely on the possibility of U.S. government financial assistance, except for the financial assistance that the government has legally committed to provide.
Separately, the agencies announced that they will request comment on proposed revisions to the market risk capital rules that the OCC, Board, and FDIC have used since 1997 for banking organizations with significant exposure to market risk. “Under the market risk capital rule, certain banking organizations are required to calculate a capital requirement for the general market risk of their covered positions and the specific risk of their covered debt and equity positions. The proposed revisions would enhance the rule’s risk sensitivity and would require public disclosures of certain qualitative and quantitative market risk information,” it explains.
The notice of proposed rulemaking on the market risk capital rule would implement changes the BCBS approved in 2005 and also would apply to certain savings associations, which currently are not covered under the rule.
Comments on the proposals are due within 120 days of publication.
U.S. regulators seek comment on Basel II rules
Proposed framework would be mandatory for large, internationally active banking organizations
- By: James Langton
- September 5, 2006 September 5, 2006
- 12:30