Risk-Based Capital Standards; Recourse and Direct Credit Substitutes; Proposed Rule
- Topics:
- Commercial Lending
- Tags:
- Risk-based Capital,
- Standards
- Source:
- Federal Deposit Insurance Corp.
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Overview: The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS) (collectively, the agencies) are proposing changes to their risk-based capital standards to address the regulatory capital treatment of recourse obligations and direct credit substitutes that expose banks, bank holding companies, and thrifts (collectively, banking organizations) to credit risk. The proposal treats recourse obligations and direct credit substitutes more consistently than under the agencies’ current risk-based capital standards. In addition, the agencies would use credit ratings and certain alternative approaches to match the risk-based capital requirement more closely to a banking organization’s relative risk of loss in asset securitizations. The proposal also requires the sponsor of a revolving credit securitization that involves an early amortization feature to hold capital against the amount of assets under management, i.e. the off-balance sheet securitized receivables. This proposal is intended to result in more consistent treatment of recourse obligations and similar transactions among the agencies, more consistent risk-based capital treatment for certain types of transactions involving similar risk, and capital requirements that more closely reflect a banking organization’s relative exposure to credit risk.
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Format: PDF | Size: 352KB | Date: Mar 2000 | Pages: 34
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