Bankin’ Bits

Today, the federal bank and thrift regulators released a proposed capital rule related to the Financial Accounting Standards Board’s adoption of Statements of Financial Accounting Standards Nos. 166 and 167 (the “Accounting Standards”). 

According to the release, in 2010 the Accounting Standards will make substantive changes to how financial service organizations account for many items—including securitized assets—that currently are excluded from these organizations’ balance sheets.  The regulators view the proposal as a way to better align regulatory capital requirements with the actual risks of certain exposures.  The main proposition in the proposal is a requirement to for financial service organizations affected by the Accounting Standards to increase their regulatory capital. 

The thirty-day comment period for the rule will begin once the proposal appears in the Federal Register.  The regulators seek specific feedback on (1) whether a phase-in of the increased regulatory capital requirements is needed, (2) the features and characteristics of transactions that, although consolidated under the Accounting Standards, might merit an alternative capital treatment (3) and the potential impact of the Accounting Standards on lending, provisioning and other activities.