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Federal R eserve Bank

December 9, 1985

DALLAS, TEXAS 7 5 2 2 2

Circular 85-144


The Chief Executive Officer of all
state member banks, bank holding
companies and others concerned in the
Eleventh Federal Reserve District
A proposal on capital adequacy guidelines

The Board of Governors of the Federal Reserve System has issued for
public comment a proposal that would define as primary capital perpetual debt
securities issued by state member banks and bank holding companies.
In addition, comment also is requested on whether a limit should be
imposed on the combined amount of mandatory convertible instruments, perpetual
preferred stock, and perpetual debt that could qualify as primary capital.
Because the treatment of perpetual debt as primary capital would
allow banking institutions to substitute another capital instrument for common
stockholders' equity, the Board is seeking additional comment on whether the
proposed treatment would, in fact, strengthen the capital positions of banking
Any views or comments concerning the proposal should be submitted in
writing to William W. Wiles, Secretary, Board of Governors of the Federal
Reserve System, 20th and Constitution Avenue, N.W., Washington, D.C., 20551,
no later than January 17, 1986. All materials submitted should refer to
Docket No. R-0557.

The Board's press release and the material as published in the
Federal Register are attached.

For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are
encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800)
527-9200 (interstate).

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (




Questions pertaining to the Board's capital adequacy guidelines
should be directed to the following Supervision and Regulation Department
State Member Banks: Marvin C. McCoy (214) 651-6657
William C. Reddick, Jr. (214) 651-6652
Bank Holding Companies: Ann Worthy (214) 651-6259
Sincerely yours,

Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102