Office of Thrift Supervision

Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Office of Thrift Supervision

Federal Banking Agencies Request Comment on Suggested Domestic Risk-Based Capital Modifications

The four federal banking agencies--the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision--today published an interagency advance notice of proposed rulemaking (ANPR) regarding potential revisions to the existing risk-based capital framework. These changes would apply to banks, bank holding companies and savings associations.

The ANPR document discusses various modifications to the U.S. risk-based capital standards including:

• Increasing the number of risk weight categories to which credit exposures may be assigned;
• Expanding the use of external credit ratings as an indicator of credit risk for externally-rated exposures;
• Expanding the range of collateral and guarantors that may qualify an exposure for lower risk weights;
• Using loan-to-value ratios, credit assessments, and other broad measures of credit risk for assigning risk-weights to residential mortgages;
• Modifying the credit conversion factor for various commitments, including those with an original maturity of under one year;
• Requiring that certain loans 90 days or more past due or in a non-accrual status be assigned to a higher risk weight category;
• Modifying the risk-based capital requirements for certain commercial real estate exposures;
• Increasing the risk sensitivity of capital requirements for other types of retail, multifamily, small business, and commercial exposures; and
• Assessing a risk-based capital charge to reflect the risks in securitizations with early amortization provisions that are backed by revolving retail exposures.

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Media Contacts:

Federal Reserve:	Andrew Williams	(202) 452-2955
FDIC:	David Barr	(202)  898-6992
OCC:	Kevin Mukri	(202)  874-5770
OTS:	Erin Hickman	(202)  906-6677

The Office of Thrift Supervision, an office of the Department of the Treasury, regulates and supervises the nation's thrift industry. OTS's mission is to ensure the safety and soundness of, and compliance with consumer protection laws by, thrift institutions, and to support their role as home mortgage lenders and providers of other community credit and financial services. OTS also oversees the activities and operations of thrift holding companies that own or control thrift institutions. Copies of OTS news releases and other documents are available at the OTS web page at www.ots.treas.gov.

Created: Thursday, 10/20/2005