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Oct 27 -- Comment period extended to January 16, 2024. https://www.federalregister.gov/d/2023-23671

1) July 27 [press release] -- Bank regulatory agencies today requested comment on a proposal to increase the strength and resilience of the banking system. The proposal would modify large bank capital requirements to better reflect underlying risks and increase the consistency of how banks measure their risks.

The changes would implement the final components of the Basel III agreement, also known as the Basel III endgame. Additionally, following the banking turmoil in March 2023, the proposal seeks to further strengthen the banking system by applying a broader set of capital requirements to more large banks. The proposal would generally apply to banks with $100 billion or more in total assets. Community banks would not be impacted by this proposal.

In particular, the proposal would standardize aspects of the capital framework related to credit risk, market risk, operational risk, and financial derivative risk. Additionally, the proposal would require banks to include unrealized gains and losses from certain securities in their capital ratios. These banks would also be subject to the supplementary leverage ratio and the countercyclical capital buffer, if activated.

The proposed improvements to strengthen the banking system are estimated to result in an aggregate 16 percent increase in common equity tier 1 capital requirements for affected bank holding companies, with the increase principally affecting the largest and most complex banks. The effects would vary for each bank based on its activities and risk profile. Most banks currently would have enough capital to meet the proposed requirements.

The proposal includes transition provisions to give banks sufficient time to adapt to the changes while minimizing any potential adverse impact. During the comment period, the agencies will collect data to further refine their estimate of the proposal's impact. Under the proposal, large banks would begin transitioning to the new framework on July 1, 2025, with full compliance starting July 1, 2028.

Separately, the Federal Reserve Board today also requested comment on a proposal that would make certain adjustments to the calculation of the capital surcharge for the largest and most complex banks. The changes would better align the surcharge to each bank's systemic risk profile, in particular by measuring a bank's systemic importance averaged over the entire year, instead of only at the year-end value.

Comments on both proposals are due by November 30, 2023, which is more than 120 days for public comment.

Fact Sheet: https://www.federalreserve.gov/aboutthefed/boardmeetings/fact-sheet-basel-20230727.pdf
Overview: https://www.federalreserve.gov/aboutthefed/boardmeetings/basel-iii-reforms-overview-20230727.pdf
Federal Register notice: Basel III endgame proposal https://www.federalreserve.gov/aboutthefed/boardmeetings/frn-basel-iii-20230727.pdf
Federal Register notice: GSIB surcharge proposal https://www.federalreserve.gov/aboutthefed/boardmeetings/frn-gsib-20230727.pdf

Press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230727a.htm
CFPB statement: https://www.consumerfinance.gov/about-us/newsroom/statement-of-cfpb-director-rohit-chopra-member-fdic-board-of-directors-proposal-strengthen-resilience-americas-largest-banks/

2) Sept 18 -- The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation are inviting public comment on a notice of proposed rulemaking (proposal) that would substantially revise the capital requirements applicable to large banking organizations and to banking organizations with significant trading activity. The revisions set forth in the proposal would improve the calculation of risk-based capital requirements to better reflect the risks of these banking organizations' exposures, reduce the complexity of the framework, enhance the consistency of requirements across these banking organizations, and facilitate more effective supervisory and market assessments of capital adequacy. The revisions would include replacing current requirements that include the use of banking organizations' internal models for credit risk and operational risk with standardized approaches and replacing the current market risk and credit valuation adjustment risk requirements with revised approaches. The proposed revisions would be generally consistent with recent changes to international capital standards issued by the Basel Committee on Banking Supervision. The proposal would not amend the capital requirements applicable to smaller, less complex banking organizations. Comments must be received by November 30, 2023.
FRN: https://www.federalregister.gov/d/2023-19200 [316 pages]

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