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Federal R eserve Bank OF DALLAS December 9, 1985 DALLAS, TEXAS 7 5 2 2 2 Circular 85-144 TO: The Chief Executive Officer of all state member banks, bank holding companies and others concerned in the Eleventh Federal Reserve District SUBJECT A proposal on capital adequacy guidelines DETAILS 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 institutions. 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. ATTACHMENTS 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 (FedHistory@dal.frb.org) - 2 - MORE INFOA ATION Questions pertaining to the Board's capital adequacy guidelines should be directed to the following Supervision and Regulation Department personnel: 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,