Comments to FDIC, Board & OCC re: Tailoring Proposals

Robert E. Feldman
Executive Secretary,
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429

Ann E. Misback
Secretary,
Board of Governors of the Federal Reserve System
Eccles Board Building
20th and C Street, N.W.
Washington, D.C. 20219
Legislative and Regulatory Activities Division
Office of the Comptroller of the Currency
400 7th Street, S.W.
Washington, D.C. 20219

The American Bankers Association (ABA) appreciates the opportunity to comment on the banking agencies’ (the Agencies) proposed rulemakings to tailor prudential standards (the Tailoring Proposals). ABA is supportive of the recent efforts of the Agencies and other policymakers to consider the effectiveness of the numerous new prudential standards implemented in recent years, with a view toward how they can be improved.

The Tailoring Proposals are a welcome recognition that existing capital, liquidity, and systemic risk regulations have not sufficiently distinguished among banks of various sizes that are engaged in a variety of activities and therefore presenting varied risk profiles. We consider the proposals’ tailoring of capital, stress testing and liquidity standards to be crucial steps toward ensuring that the character of regulation fits the character of a firm. Therefore, we support the proposed five-category framework and believe it will help ensure that relevant regulations are efficient, effective, and appropriately applied. We encourage the Agencies to finalize the Tailoring Proposals promptly, subject to the comments below.

Subsequent to finalizing the Tailoring Proposals, the Agencies should continue to review how the prudential framework can be further improved and refined. In addition to the proposals related to tailored resolution and capital plans that are referenced in the Tailoring Proposals, the Agencies should embrace an ongoing effort to monitor and adjust prudential standards.

This letter is composed of four parts:

• Section I discusses the appropriateness of the factors for determining a bank’s risk category.
• Section II discusses the proposed tailoring of the liquidity framework.
• Section III discusses the proposed tailoring of capital and stress testing framework.
• Section IV discusses some additional prudential standards that the regulators should review.

Download the comment letter to read the full text.