The Office of the Comptroller of the Currency ("OCC"), the Board of Governors of the Federal Reserve System and the FDIC (collectively, the "agencies") proposed extending the current transitional capital treatment of certain regulatory capital deductions, risk weights and minority interest requirements. A request for comments on the proposal was published in the Federal Register. Comments must be submitted by September 25, 2017.
The agencies adopted rules in 2013 that made capital requirements for banking organizations more stringent. Certain rules were subject to transitional provisions that allowed for institutions to make necessary preparations (see previous coverage.) As more fully described in an OCC Bulletin, "the agencies propose to maintain the capital rule's 2017 transition provisions for the regulatory capital treatment of the following items: (i) mortgage servicing assets, (ii) deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks, (iii) investments in the capital of unconsolidated financial institutions (both significant and non-significant investments), and (iv) minority interest included in regulatory capital." These transitional provisions are set to expire and the rules are scheduled to become applicable at the end of 2017. The proposal would extend the transitional provisions, allowing the agencies to simplify the rules while maintaining the "safety and soundness and quality and quantity of regulatory capital in the banking system."
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