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Financial Institution Letter

Risk-Based Capital Rules Notice of Proposed Rulemaking on Risk-Based Capital Standards: Standardized Framework

July 29, 2008
Notes
 
Summary: The federal bank and thrift regulatory agencies have jointly issued the attached Notice of Proposed Rulemaking (NPR) and are seeking comment on the domestic application of the Basel II standardized framework for all domestic banks, bank holding companies, and savings associations that are not subject to the Basel II advanced approaches rule. The FDIC will accept comments on the NPR through October 27, 2008.

Highlights:
In the attached NPR, the agencies propose to implement a new optional framework for calculating risk-based capital based on the Basel II Standardized Approach to credit risk and the Basel II Basic Indicator Approach to operational risk. The proposal would:

  • Expand the use of credit ratings for determining risk weights,
  • Base risk weights for residential mortgages on loan-to-value ratios,
  • Expand the types of financial collateral and guarantees available to banks to offset credit risk,
  • Offer more risk-sensitive approaches for recognizing the benefits of mitigating credit risk,
  • Increase the risk weight for certain short-term commitments,
  • Improve the risk sensitivity of the risk-based capital requirements for securitizations and equity investments, and
  • Institute a risk-based capital requirement for operational risk.
The NPR includes a series of requests for comment on the proposed implementation of the standardized framework. The agencies are also withdrawing the Basel 1A proposal issued on December 26, 2006.

Distribution:
FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer

"Key Aspects of the Proposed Rule on Risk- Based Capital Guidelines: Capital Adequacy Guidelines; Standardized Framework"

"Key Aspects of the Proposed Rule on Risk- Based Capital Guidelines: Capital Adequacy Guidelines; Standardized Framework" - PDF ( PDF Help )

Notice of Proposed Rulemaking, Risk-Based Capital Guidelines; Capital Adequacy Guidelines; Standardized Framework 480K ( PDF Help )

Note:
FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/financial-institution-letters/2008/index.html .

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html .

Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703- 562-2200).



Additional Related Topics:

  • Risk-Based Capital Rules
  • 12 CFR Part 325
  • Basel II
FIL-69-2008
Attachment(s)

Last Updated: July 29, 2008