Regulatory Capital Rule’s FAQs Released

Financial Institutions are accountable for complex risk-based regulatory capital rules. Some may use internal risk management models approved by the relevant regulator while others must use standardized rules set out in the regulations. On April 6th, The Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (the agencies), issued FAQs for clarification for regulated institutions about the agencies’ regulatory capital rule. The FAQ topics included, but are not limited to:

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  • The definition of capital,
  • High-volatility commercial real estate (HVCRE) exposures,
  • Real estate and off-balance-sheet exposures,
  • Equity exposures to investment funds,
  • Qualifying central counterparty, and
  • Credit valuation adjustment.
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Reserve Banks are asked to distribute the FAQs to the state member banks, bank holding companies, and relevant savings and loan holding companies in their districts and to appropriate supervision staff.  As the agencies anticipate issuing additional FAQs in response to questions from institutions, the Federal Reserve will periodically update the FAQ document.

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