Basel III Capital

On September 27 the federal banking agencies approved a proposed rule that would simplify the complex Basel III regulatory capital calculations for all but the very largest banks. The proposal would simplify the treatment of assets subject to common equity tier 1 capital threshold deductions and limitations on minority interest and replace the definition of high-volatility commercial real estate exposures with a more straightforward measure.

ABA President and CEO Rob Nichols described the proposal as a “step in the right direction that acknowledges what our members already know.” While aspects of the proposal are limited to banks not using the Basel advanced approaches, ABA will continue advocating for these and other simplification efforts to apply to all banks. “We look forward to working with the regulators on this proposal and other sensible reforms, including recommendations from the Treasury Department’s June report that would allow banks to continue playing their important role in accelerating economic growth.”

For more information, or to join ABA's working group on this proposal, contact Hugh Carney.

ABA Position

ABA believes additional adjustments to the final Basel III rules are needed to ensure the regulations work for banks of all sizes and do not impede economic growth. For example, ABA has advocated changes that would allow S corporation banks whose capital levels are not above the new required capital buffers to make limited distributions to shareholders in order to pay taxes due on the banks’ earnings.

 

 Newsbytes

 
 

 Comment Letters

 
 

 ABA Staff Analysis

 

Please contact Hugh Carney for more information.