FRB Issues Final Rule Changes in Order to Align with the Basel III Capital Framework

The Board of Governors of the Federal Reserve System ("FRB") issued a final rule to align certain of its capital rules with the Basel III capital framework, which was adopted by the FRB earlier this year. The changes to the rule reflect modifications by the Organization for Economic Cooperation and Development regarding country risk classifications. The final rule also clarifies criteria for determining whether underlying assets are delinquent for certain traded securitization positions. Additionally, it clarifies disclosure deadlines, and modifies the definition of a covered position.

FRB also made minor modifications to the Basel III revised capital framework to clarify the criteria for subordinated debt instruments that may be counted as Tier 2 capital.

See: Regulatory Capital Final Rule Change; Risk-Based Capital Guidelines Final Rule Change; FRB Press Release.