Federal Banking Agencies Extend Comment Deadline for Proposed Capital Rules
On August 8, 2012, the federal banking regulatory agencies announced that they have extended until October 22, 2012, the comment period for three notices of proposed rulemaking that would revise and replace the agencies’ current capital rules, including implementing the Basel III capital standards. If implemented as proposed, the Basel III capital standards will require banks to maintain more capital and more Tier 1 common equity capital, narrow the definition of capital and Tier 1 capital, and increase the risk weightings for certain types of assets. The Basel III capital standards will also eliminate Tier 1 treatment for trust preferred securities and cumulative preferred stock, and will significantly change the risk weightings that are applied to certain assets.
If adopted, the proposed capital rules will usher in the most significant change to bank regulatory capital standards since the risk-based capital approach was first implemented in response to Basel I. We strongly urge, as have several industry groups, that community banks seriously consider submitting written comments to the federal banking regulators regarding the proposed capital rules. Such comments could focus on the impact of Basel III capital standards on community banks, or whether the Basel III capital standards will address any of the issues currently confronting the U.S. banking industry and housing industry.
The Financial Institutions practice group at Troutman Sanders advises clients in understanding the impact of these proposed regulations and preparing comment letters.
© TROUTMAN SANDERS LLP. ADVERTISING MATERIAL. These materials are to inform you of developments that may affect your business and are not to be considered legal advice, nor do they create a lawyer-client relationship. Information on previous case results does not guarantee a similar future result.