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6.17 Capital Requirements for BHCs and SLHCs and Insured Depository Institutions

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6.17 Capital Requirements for BHCs and SLHCs and Insured Depository Institutions

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6.17.     Capital Requirements for BHCs and SLHCs and Insured Depository Institutions. 

6.17.1.     BHC and Depository Institution Countercyclical Capital Principles.  In establishing capital requirements for BHCs and depository institutions the appropriate Federal banking agencies are directed to make capital requirements countercyclical – meaning that additional capital will be required in times of economic expansion, but less capital will be required during periods of economic downturn, consistent with the safety and soundness of the BHC.  This approach is consistent with the direction of the Basel Committee to adopt less procyclical capital requirements.  

6.17.2.              SLHC Capital Requirements.  SLHCs historically have not been subject to minimum statutory capital requirements.  No longer will it be the case.  The Act authorizes the Fed to issue SLHC capital requirements for SLHCs, which like the BHC’s are to be countercyclical.  This provision will operate in conjunction with Section 171 of the Act (the Collins Amendment) which will require SLHCs, subject to a general 5-year phase-in period, to meet capital requirements no less than those imposed on insured depository institutions.