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Thursday,
January 28, 2010

Part II
Department of the Treasury
Office of the Comptroller of the
Currency
12 CFR Part 3
Office of Thrift Supervision
12 CFR Part 567

Federal Reserve System
12 CFR Parts 208 and 225

Federal Deposit Insurance
Corporation

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12 CFR Part 325
Risk-Based Capital Guidelines; Capital
Adequacy Guidelines; Capital
Maintenance: Regulatory Capital; Impact
of Modifications to Generally Accepted
Accounting Principles; Consolidation of
Asset-Backed Commercial Paper Programs;
and Other Related Issues; Final Rule
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Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Rules and Regulations

DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 3
[Docket ID: OCC–2009–0020]
RIN 1557–AD26

FEDERAL RESERVE SYSTEM
12 CFR Parts 208 and 225
[Regulations H and Y; Docket No. R–1368]

FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 325
RIN 3064–AD48

DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 567
[No. OTS–2010–0002]
RIN 1550–AC36

Risk-Based Capital Guidelines; Capital
Adequacy Guidelines; Capital
Maintenance: Regulatory Capital;
Impact of Modifications to Generally
Accepted Accounting Principles;
Consolidation of Asset-Backed
Commercial Paper Programs; and
Other Related Issues

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AGENCIES: Office of the Comptroller of
the Currency, Department of the
Treasury; Board of Governors of the
Federal Reserve System; Federal Deposit
Insurance Corporation; and Office of
Thrift Supervision, Department of the
Treasury.
ACTION: Final rule.
SUMMARY: The Office of the Comptroller
of the Currency (OCC), Board of
Governors of the Federal Reserve
System (Board), Federal Deposit
Insurance Corporation (FDIC), and the
Office of Thrift Supervision (OTS)
(collectively, the agencies) are amending
their general risk-based and advanced
risk-based capital adequacy frameworks
by adopting a final rule that eliminates
the exclusion of certain consolidated
asset-backed commercial paper
programs from risk-weighted assets;
provides for an optional two-quarter
implementation delay followed by an
optional two-quarter partial
implementation of the effect on riskweighted assets that will result from
changes to U.S. generally accepted
accounting principles; provides for an

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optional two-quarter delay, followed by
an optional two-quarter phase-in, of the
application of the agencies’ regulatory
limit on the inclusion of the allowance
for loan and lease losses (ALLL) in tier
2 capital for the portion of the ALLL
associated with the assets a banking
organization consolidates as a result of
changes to U.S. generally accepted
accounting principles; and provides a
reservation of authority to permit the
agencies to require a banking
organization to treat entities that are not
consolidated under accounting
standards as if they were consolidated
for risk-based capital purposes,
commensurate with the risk relationship
of the banking organization to the
structure. The delay and subsequent
phase-in periods of the implementation
will apply only to the agencies’ riskbased capital requirements, not the
leverage ratio requirement.
DATES: This rule is effective March 29,
2010. Banking organizations may elect
to comply with this final rule as of the
beginning of their first annual reporting
period that begins after November 15,
2009.
FOR FURTHER INFORMATION CONTACT:
OCC: Paul Podgorski, Risk Expert,
Capital Policy Division, (202) 874–5070,
or Carl Kaminski, Senior Attorney, (202)
874–5090, or Hugh Carney, Attorney,
Legislative and Regulatory Activities
Division, (202) 874–5090, Office of the
Comptroller of the Currency, 250 E
Street, SW., Washington, DC 20219.
Board: Barbara J. Bouchard, Associate
Director, (202) 452–3072, or Anna Lee
Hewko, Manager, Supervisory Policy
and Guidance, (202) 530–6260, Division
of Banking Supervision and Regulation;
or April C. Snyder, Counsel, (202) 452–
3099, or Benjamin W. McDonough,
Counsel, (202) 452–2036, Legal
Division. For the hearing impaired only,
Telecommunication Device for the Deaf
(TDD), (202) 263–4869.
FDIC: James Weinberger, Senior
Policy Analyst (Capital Markets), (202)
898–7034, Christine Bouvier, Senior
Policy Analyst (Bank Accounting), (202)
898–7289, Division of Supervision and
Consumer Protection; or Mark Handzlik,
Senior Attorney, (202) 898–3990, or
Michael Phillips, Counsel, (202) 898–
3581, Supervision Branch, Legal
Division.
OTS: Teresa A. Scott, Senior Policy
Analyst, (202) 906–6478, Capital Risk,
Christine Smith, Senior Policy Analyst,
(202) 906–5740, Capital Risk, or Marvin
Shaw, Senior Attorney, (202) 906–6639,
Legislation and Regulation Division,
Office of Thrift Supervision, 1700 G
Street, NW., Washington, DC 20552.
SUPPLEMENTARY INFORMATION:

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I. Background
A. Changes to U.S. Accounting
Standards and the Effect on Regulatory
Capital
On June 12, 2009, the Financial
Accounting Standard Board (FASB)
issued Statement of Financial
Accounting Standards No. 166,
Accounting for Transfers of Financial
Assets, an Amendment of FASB
Statement No. 140 (FAS 166), and
Statement of Financial Accounting
Standards No. 167, Amendments to
FASB Interpretation No. 46(R) (FAS
167). Among other things, FAS 166 and
FAS 167 modified the accounting
treatment under U.S. generally accepted
accounting principles (GAAP) of certain
structured finance transactions
involving a special purpose entity.1 FAS
166 and FAS 167 are effective as of the
beginning of a banking organization’s 2
first annual reporting period that begins
after November 15, 2009
(implementation date), including
interim periods therein, and for interim
and annual periods thereafter.3
The agencies’ risk-based measures for
banking organizations (the general riskbased capital rules4 and the advanced
approaches rules,5 collectively the riskbased capital rules) establish capital
requirements intended to reflect the
risks associated with on-balance sheet
exposures as well as off-balance sheet
exposures, such as guarantees,
commitments, and derivative
transactions. The agencies use GAAP as
the initial basis for determining whether
an exposure is treated as on- or offbalance sheet for risk-based capital
1 The accounting treatment of these transactions
and structures was previously governed by the
FASB’s Statement of Financial Accounting
Standards No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments
of Liabilities (2000) (FAS 140) and FASB
Interpretation No. 46(R), Consolidation of Variable
Interest Entities (2003) (FIN 46(R)). References
herein to FASB Statements of Financial Accounting
Standards and Interpretations are to the FASB’s
‘‘pre-Codification standards’’ documents and do not
reflect modifications that have been made by the
FASB as the related text is incorporated in the
FASB Accounting Standards Codification that
FASB announced on July 1, 2009.
2 Unless otherwise indicated, the term ‘‘banking
organization’’ includes banks, savings associations,
and bank holding companies (BHCs). The terms
‘‘bank holding company’’ and ‘‘BHC’’ refer only to
bank holding companies regulated by the Board.
3 See relevant provisions in FAS 166, paragraphs
5–7, and FAS 167, paragraphs 7–10.
4 12 CFR part 3, appendix A (OCC); 12 CFR parts
208 and 225, appendix A (Board); 12 CFR part 325,
appendix A (FDIC); and 12 CFR part 567, subpart
B (OTS). The risk-based capital rules generally do
not apply to BHCs with $500 million or less in
consolidated assets.
5 12 CFR part 3, appendix C (OCC); 12 CFR part
208, appendix F; and 12 CFR part 225, appendix
G (Board); 12 CFR part 325, appendix D (FDIC); 12
CFR 567, Appendix C (OTS).

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Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Rules and Regulations
purposes. Additionally, the agencies’
leverage measure (leverage rule) 6 uses
consolidated on-balance sheet assets as
the basis for setting minimum capital
requirements that are intended to limit
the degree to which a banking
organization can leverage its equity
capital base.
FAS 166 and FAS 167, among other
things, establish new standards for
reporting companies’ transfers of assets
to special purpose entities, known as
variable interest entities (VIEs) under
GAAP, and for consolidating VIEs.
Under FAS 167, banking organizations
may be required to consolidate assets,
liabilities, and equity in certain VIEs
that were not consolidated under the
standards that FAS 166 and FAS 167
replaced. Most banking organizations
will be required to implement the new
consolidation standards as of January 1,
2010.7 The agencies’ risk-based capital
and leverage rules (collectively, the
capital rules) generally would require a
banking organization to include assets
held by newly consolidated VIEs in its
leverage and risk-based capital ratios
determined under those rules. At the
same time, a consolidating banking
organization may need to establish an
ALLL 8 to cover estimated credit losses
on the assets consolidated under FAS
167. As a consequence, absent a change
in the capital rules and all other factors
remaining constant, both the leverage
and risk-based capital ratios of banking
organizations that must consolidate due
to FAS 167 VIEs that they did not
previously consolidate are likely to fall
by varying amounts.

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B. Notice of Proposed Rulemaking
On September 15, 2009, the agencies
published a notice of proposed
rulemaking (NPR) that solicited
6 12 CFR part 3 (OCC);12 CFR part 208, appendix
B and 12 CFR part 225 appendix D (Board); 12 CFR
325.3 (FDIC); 12 CFR 567.8 (OTS).
7 While most banking organizations affected by
FAS 166 and FAS 167 will implement the new
standards on January 1, 2010, some banking
organizations use annual reporting periods other
than the calendar year and will implement the new
standards at the beginning of their first annual
reporting period that starts after November 15,
2009.
8 Under GAAP, an ALLL should be recognized
when events have occurred indicating that it is
probable that an asset has been impaired or that a
liability has been incurred as of the balance sheet
date and the amount of the loss can be reasonably
estimated. Furthermore, under the risk-based
capital rules, the ALLL is a component of tier 2
capital and, therefore, included in the numerator of
the total risk-based capital ratio. However, the
amount of the ALLL that may be included in tier
2 capital is limited to 1.25 percent of gross riskweighted assets under the risk-based capital rules.
12 CFR part 3, appendix A § 2(b)(1) (OCC); 12 CFR
part 208, appendix A § II.A.2.a and 12 CFR part 225,
appendix A § II.A.2.a (Board); 12 CFR part 325,
appendix A § I.A.2.i. (FDIC); 12 CFR 567.5 (OTS).

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information and views from the public
on the effect the accounting changes
mandated by FAS 166 and FAS 167
would have on regulatory capital, the
appropriateness of adjusting the riskbased capital treatment of some classes
of assets that would be consolidated by
banking organizations as a result of their
implementation of FAS 167, and the
utility of a phase-in of the regulatory
capital effects of the accounting
changes, among other issues.9
In addition, the NPR proposed
modifying the agencies’ risk-based
capital rules by eliminating provisions
that permit a banking organization to
exclude assets of consolidated assetbacked commercial paper (ABCP)
programs from risk-weighted assets
(ABCP exclusion) and instead assess a
risk-based capital requirement against
any contractual exposures of the
banking organization to such ABCP
programs.10 The NPR also proposed
eliminating an associated provision in
the general risk-based capital rules
(incorporated by reference in the
advanced approaches) that excludes
from tier 1 capital the minority interest
in a consolidated ABCP program not
included in a banking organization’s
risk-weighted assets.11 In addition, the
NPR proposed a new reservation of
authority for the agencies’ risk-based
capital rules to permit a banking
organization’s primary Federal
supervisor to treat entities that are not
consolidated under GAAP as if they
were consolidated for risk-based capital
purposes, commensurate with the risk
relationship of the banking organization
to the entity.
Collectively, the agencies received
approximately 41 comment letters from
banking organizations, banking industry
associations, mortgage companies,
investment and asset management firms,
and individuals. Commenters generally
agreed with the agencies’ preliminary
identification of VIEs that are likely to
be consolidated by banking
organizations as a result of FAS 167.
Most notably, these included VIEs
9 74

FR 47138 (September 15, 2009).
CFR part 3, appendix A, § 3(a)(5) and 12
CFR part 3, appendix C § 42(l) (OCC); 12 CFR part
208, appendix A, § III.B.6.b and appendix F § 42(l);
and 12 CFR part 225, appendix A, § III.B.6.b and
appendix G § 42(l) (Board); 12 CFR part 325,
appendix A, § II.B.6.b and 12 CFR part 325,
appendix D, § 42(l) (FDIC); 12 CFR 567.6(a)(2)(vi)(E)
and 12 CFR part 567, appendix C, § 42(l) (OTS).
11 12 CFR part 3, appendix A, § 2(a)(3)(ii) (OCC);
12 CFR parts 208 and 225, appendix A, § II A.1.c
(Board); 12 CFR part 325, appendix A, § I.A.1.(d)
(FDIC); 12 CFR 567.5(a)(iii)(OTS). See 12 CFR part
3, appendix C § 11(a) (OCC); 12 CFR part 208,
appendix F, § 11(a) and 12 CFR part 225, appendix
G, § 11(a) (Board) ; 12 CFR part 325, appendix D,
§ 11(a) (FDIC); 12 CFR part 567, appendix C, § 11(a)
(OTS).
10 12

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associated with (1) ABCP programs; (2)
revolving securitizations structured as
master trusts, including credit card and
home equity line of credit (HELOC)
securitizations; (3) certain mortgage loan
securitizations not guaranteed by the
U.S. government or a U.S. governmentsponsored agency; and (4) certain term
loan securitizations in which a banking
organization retains a residual interest
and servicing rights, including some
student loan and automobile loan
securitizations.12
A number of commenters asserted
that the implementation of FAS 166 and
FAS 167 without changes to the
agencies’ risk-based capital and leverage
rules would increase regulatory capital
requirements for banking organizations,
as would the proposed elimination of
the ABCP exclusion. They argued this
would have a negative and procyclical
impact on financial markets and the
economy, particularly as banking
organizations recover from the recent
financial crises and recession, by
increasing the cost of and ultimately
curtailing lending. Most commenters
also argued that there would be negative
competitive equity effects from
increased regulatory capital
requirements that would disadvantage
U.S. banking organizations relative to
foreign and domestic competitors not
subject to similarly high capital
requirements. A few commenters
asserted that competitive equity
concerns were most severe with respect
to foreign banking competitors. Some
commenters also expressed concern that
higher capital requirements would
provide incentives for banking
organizations to conduct more activity
in less stringently regulated foreign
jurisdictions.
Many commenters also argued that
such implementation would
inappropriately align regulatory capital
requirements with GAAP’s controlbased approach to consolidation, in
contrast to the credit-risk focus of the
agencies’ risk-based capital rules.
Commenters overwhelmingly supported
a delay and/or phase-in of the regulatory
capital requirements associated with the
implementation of FAS 167 for a period
12 Many commenters also expressed concern
regarding the possibility that VIEs used for asset
management, money market, and private equity
investments where the fund manager earns more
than a non-significant performance fee could be
subject to consolidation under FAS 167, and urged
the agencies to implement alternative regulatory
capital treatments for such funds. On December 4,
2009, FASB proposed that the application of FAS
167 to such entities be deferred for an
undetermined period of time. As a result, both riskbased and leverage capital requirements related to
these assets would remain unchanged for the
duration of the deferral. The agencies are taking no
action with respect to these assets at this time.

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Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Rules and Regulations

of up to three years. A number of
commenters asserted that the proposed
elimination of the exclusion of
consolidated ABCP program assets from
risk-weighted assets would lead to an
inappropriate capital requirement for
ABCP programs with certain structural
features.
II. Final Rule

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A. Transition Mechanism for Risk-Based
Capital Requirements Associated With
the Implementation of FAS 166 and
FAS 167
In the final rule, the agencies are
instituting a transition mechanism
consisting of: (1) An optional twoquarter delay, through the end of the
second quarter after the implementation
date of FAS 166 and FAS 167 for a
banking organization, of recognition of
the effect on risk-weighted assets and
ALLL includable in tier 2 capital that
results from a banking organization’s
implementation of FAS 167 and (2) an
optional phase-in, for a banking
organization that has opted for the
delay, of those effects over the next two
quarters.13 A banking organization that
chooses to implement this transition
mechanism must apply it to all relevant
VIEs. The effect of the transition
mechanism on a banking organization’s
risk-based capital ratios would be
reflected in the regulatory capital
information the organization reports in
its regulatory reports 14 for the four
calendar quarter-end regulatory report
dates following the banking
organization’s implementation date.
In the NPR, the agencies requested
comment on any significant costs or
burdens, or other relevant
considerations that the agencies should
consider with respect to phasing-in the
impact on capital requirements relating
to banking organizations’
implementation of FAS 167. The
agencies also requested specific and
detailed rationales, evidence, and data
in support of commenters’ positions and
requested comment on one potential
four-quarter phase-in method.
Almost every commenter asserted that
a four-quarter phase-in of any additional
capital requirements resulting from
banking organizations’ implementation
of FAS 167 would be insufficient. The
13 For example, if a banking organization has a
calendar year reporting period, the optional twoquarter delay period ends June 30, 2010, and the
optional phase-in period ends December 31, 2010.
14 For banks, Schedule RC–R of the Consolidated
Reports of Condition and Income (Call Report); for
savings associations, Schedule CCR of the Thrift
Financial Report (TFR); and for bank holding
companies, Schedule HC–R of the Consolidated
Financial Statements for Bank Holding Companies
(FR Y–9C).

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majority of commenters requested at
least a three-year phase-in period. The
commenters offered three primary
rationales for a longer phase-in period:
(1) Any shorter phase-in would unfairly
penalize banking organizations given
their already established businesses,
practices, and programs conceived in
good faith to comply with the current
capital standards; (2) banking
organizations need a longer period to
phase out structures designed for
current regulatory capital treatment
and/or adopt the more risk-sensitive
capital treatment of the advanced
approaches rules; and (3) corporate
financing and capital planning covers
more than a four-quarter horizon. In
addition, some commenters asserted
that the cost of raising new capital in
the current economic environment is
high. Several commenters requested, in
addition to the increased phase-in time,
a six-month delay on the effect of
implementation of FAS 167 on capital
requirements, during which the
agencies would further study the effects
of FAS 166 and FAS 167
implementation, including the
appropriate regulatory capital treatment
for VIEs consolidated as a result of FAS
167 implementation. A few commenters
indicated that there should be no phasein or that any phase-in should be as
short as possible, on the grounds that
any phase-in would delay needed
changes.
The agencies have long maintained
that a banking organization should hold
capital commensurate with the level
and nature of the risks to which it is
exposed. As described below, the
agencies believe that the effects of FAS
166 and FAS 167 on banking
organizations’ risk-based capital ratios
will result in regulatory capital
requirements that better reflect, in many
cases, banking organizations’ exposure
to credit risk. As a result, the agencies
do not believe it is appropriate for
banking organizations to delay
recognizing VIEs consolidated under
FAS 167 and the risks associated with
them in their risk-based capital ratios
for several years, as some commenters
proposed. However, as discussed below,
in order to avoid abrupt adjustments
that could undermine or complicate
government actions to support the
provision of credit to U.S. households
and businesses in the current economic
environment, the agencies are providing
banking organizations with an optional
two-quarter implementation delay
followed by an optional two-quarter
partial implementation of the effect of
FAS 167 on risk-weighted assets and
ALLL includable in tier 2 capital.

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Many commenters asserted that
banking organizations’ implementation
of FAS 166 and FAS 167 without a
change to the regulatory capital rules
would decrease the volume and increase
the cost of lending to consumers and
businesses. Commenters did not,
however, provide adequate empirical
analyses and projections of this impact.
The agencies note that both the supply
of and demand for credit has decreased
over recent quarters due to many
factors, including household, business,
and financial sector deleveraging. As
described in the NPR, affected banking
organizations’ risk-based and leverage
capital ratios likely will decrease with
their implementation of FAS 166 and
FAS 167. However, based on public
disclosures by some banking
organizations and supervisory
information, including the Supervisory
Capital Assessment Program (SCAP),15
risk-based and leverage capital ratios at
the largest banking organizations (the
banking organizations most affected by
FAS 166 and FAS 167) will remain
substantially in excess of regulatory
minimums. The agencies thus believe
that, based on available information,
these banking organizations will not
encounter an immediate or near-term
need to decrease lending or raise
substantial amounts of new capital for
risk-based capital purposes related to
the incremental effects of this final rule.
In addition, smaller banking
organizations, including community
banking organizations, generally did not
raise concerns about an adverse impact
on smaller banking organizations from
the implementation of FAS 166 and
FAS 167.
Although the agencies believe that a
banking organization’s implementation
of FAS 166 and FAS 167 will result in
regulatory capital requirements that
more appropriately reflect risks to
which the banking organization is
exposed, the agencies also recognize
that government initiatives may affect
the securitization market in the near
term. Several government programs
supporting the securitization market,
including the Commercial Paper
Funding Facility and the noncommercial mortgage-backed securities
15 The SCAP was a supervisory exercise
conducted in the first half of 2009 to determine if
the 19 largest banking organizations (the banking
organizations most affected by FAS 166 and FAS
167 due to the volume of their securitization
activities) held regulatory capital sufficient to
absorb losses under a specified adverse scenario.
The exercise included consideration of estimates of
the impact of FAS 166 and FAS 167 on banking
organizations’ balance sheets and resulting riskbased capital requirements. Further information
about SCAP results is available at http://
www.federalreserve.gov/bankinforeg/scap.htm.

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portion of the Term Asset-Backed
Securities Loan Facility, are scheduled
to terminate in the first quarter of 2010.
Moreover, the Congress and financial
regulators, including the agencies, are
considering a number of legislative and
regulatory changes that would affect
securitization activities. Because the
agencies cannot fully assess the
combined impact of these potential
changes on the securitization market,
and because securitization remains an
important source of funding for banking
organizations, the agencies are
providing in the final rule an optional
transition mechanism that permits a
banking organization to phase in the
impact of FAS 167 on its risk-weighted
assets and ALLL includable in tier 2
capital.
The transition mechanism consists of
an optional two-quarter delay in
implementation followed by an optional
two-quarter partial implementation of
the effect of FAS 167 on risk-weighted
assets and ALLL includable in tier 2
capital.16 The timing of the transition
reflects the termination dates of the
government programs supporting the
securitization market and the potential
for uncertainty regarding securitization
reform initiatives to extend through
2010. The delay and partial
implementation periods also provide
time for financial market participants
and the agencies to observe the effects
of these changes on bank lending,
financial markets and the overall
economy. The transition mechanism is
optional because it requires a banking
organization to maintain two sets of
records for the duration of the delay and
partial implementation periods—to
account for affected VIEs for financial
reporting under GAAP and separately to
track the implementation-date
contractual exposures to these VIEs and
the ALLLs attributable to their assets for
regulatory capital reporting—a dual
recordkeeping requirement that banking
organizations have expressed concerns
about in the past.
A banking organization generally
would adopt the transition mechanism
as of the date it implements FAS 166
and FAS 167, which is the starting date
of its first annual reporting period
beginning after November 15, 2009.
16 One commenter expressed concern about a
statutory provision in the Home Owner’s Lending
Act (HOLA), uniquely applicable to savings
associations, which limits the amount of consumer
loans to 35 percent of the amount of a savings
association’s total assets. OTS notes that any
provision under HOLA would be treated consistent
with the transition mechanism.

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1. Transition for Risk-Weighted Assets
For the banking organization’s first
two quarters after the date it implements
FAS 166 and FAS 167 (exclusion
period), including for the two calendar
quarter-end regulatory report dates
within the exclusion period, the
banking organization may choose to
exclude from risk-weighted assets those
assets held by VIEs that the banking
organization must consolidate as a
result of implementing FAS 167,
provided that (1) the VIE existed prior
to the banking organization’s
implementation date and (2) the
banking organization did not
consolidate the VIE on its balance sheet
for calendar quarter-end regulatory
report dates prior to the implementation
date. A banking organization that
applies this exclusion to any VIE must
apply the exclusion to all VIEs that
qualify for the exclusion.
During the exclusion period, the
banking organization may also exclude
from risk-weighted assets those assets
held by VIEs that are consolidated
ABCP programs (ABCP program VIEs),
provided that the banking organization
is the sponsor of the ABCP program and
the banking organization consolidated
the ABCP program VIE onto its balance
sheet under GAAP and excluded the
VIE’s assets from its risk-weighted assets
prior to the implementation date. A
banking organization that applies this
exclusion to any ABCP program VIE
must apply the exclusion to all ABCP
program VIEs that qualify for the
exclusion.
A banking organization electing to
exclude assets of any VIE pursuant to
the transition mechanism described
above may not, however, exclude from
risk-weighted assets the assets of a VIE
to which the banking organization has
provided recourse through credit
enhancement beyond any contractual
obligation to support assets it has sold
(implicit support).
During the exclusion period, the
banking organization would include in
risk-weighted assets an amount equal to
the risk-weighted assets it would have
been required to calculate for its
contractual exposures to these VIEs on
the implementation date, including
direct-credit substitutes, recourse
obligations, residual interests, liquidity
facilities, and loans, under the riskbased capital rules prior to its
implementation of FAS 166 and FAS
167. The agencies expect a banking
organization would calculate riskweighted assets using a methodology
similar to the methodology used to
calculate the risk weights of exposures

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to ABCP programs pursuant to the
ABCP exclusion.
The amount of risk-weighted assets
associated with assets held by VIEs
subject to exclusion as described above
as of the implementation date of FAS
166 and FAS 167 is the exclusion
amount. For the third and fourth
quarters after the implementation date
(phase-in period), including for the two
calendar quarter-end regulatory report
dates within those quarters, a banking
organization that has adopted the
optional transition mechanism for the
first two quarters may exclude from
risk-weighted assets 50 percent of the
exclusion amount. However, the
banking organization may not include in
risk-weighted assets an amount less
than the aggregate risk-weighted assets
it held based on its contractual
exposures to these VIEs as of the
implementation date, had the VIEs not
been consolidated. This floor on riskweighted assets ensures that,
notwithstanding these transition
provisions, a banking organization
always calculates risk-weighted assets
in a manner that at a minimum reflects
its contractual risk exposure to its
consolidated VIEs as of the
implementation date.
2. Transition for Allowance for Loan
and Lease Losses
During the exclusion period,
including for the two calendar quarterend regulatory report dates within the
exclusion period, a banking
organization that adopts the transition
mechanism for risk-weighted assets
described in section II.A.1. above by
excluding assets of consolidated VIEs
from risk-weighted assets may also
include without limit in tier 2 capital
the full amount of the ALLL calculated
as of the implementation date that is
attributable to the assets it excluded
pursuant to the transition mechanism
for risk-weighted assets (inclusion
amount). That is, the ALLL included in
tier 2 capital pursuant to this transition
mechanism during the exclusion period
would not be subject to (1) the 1.25
percent of risk-weighted assets limit
(1.25 percent limit) on the ALLL in tier
2 capital contained in the agencies’
general risk-based capital rules; 17 or (2)
the limits in section 13 of the agencies’
advanced approaches rules on including
ALLL in tier 2 capital.18
17 See

footnote 8.
CFR part 3, appendix C § 13(a)(2) and (b)
(OCC); 12 CFR part 208, appendix F § 13(a)(2) and
(b); and 12 CFR part 225, appendix G § 13(a)(2) and
(b) (Board); 12 CFR part 325, appendix D, § 13(a)(2)
and (b) (FDIC); 12 CFR part 567, appendix C,
§ 13(a)(2) and (b) (OTS).
18 12

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During the phase-in period, including
for the two calendar quarter-end
regulatory report dates within the
phase-in period, a banking organization
that has adopted the transition
mechanism for risk-weighted assets
during the phase-in period may include
in tier 2 capital without limit 50 percent
of the inclusion amount. The banking
organization’s ALLL in excess of 50
percent of the inclusion amount may be
included in tier 2 capital subject to the
1.25 percent limit. As with the
transition for risk-weighted assets, a
banking organization may not adopt the
transition mechanism for the ALLL for
VIEs that it must consolidate after
implementing FAS 167 to which it has
provided implicit support. Therefore, a
banking organization must count toward
the 1.25 percent limit all ALLL it
includes in tier 2 capital that is
associated with assets of a VIE to which
it has provided implicit support.
B. Regulatory Capital Requirements
Associated With the Implementation of
FAS 166 and FAS 167

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1. Risk-Based Capital Rules
The agencies have concluded that it is
appropriate to provide an optional delay
of and then phase in the effect of
banking organizations’ implementation
of FAS 166 and FAS 167 on riskweighted assets and the ALLL included
in tier 2 capital as described above.
However, after careful consideration
and analyses of commenters’ arguments
and supporting information, as well as
banking organizations’ financial
disclosures, and supervisory data and
analyses, the agencies have concluded
that there is insufficient justification to
warrant a permanent modification of the
risk-based capital rules in response to
banking organizations’ implementation
of FAS 166 and FAS 167.
a. Risk-Weighted Assets
As the agencies noted in the NPR, the
qualitative analysis required under FAS
167, as well as enhanced requirements
for recognizing transfers of financial
assets under FAS 166, converge in many
respects with the agencies’ assessment
of a banking organization’s ongoing
credit risk exposure to the VIEs that are
required to be consolidated under FAS
167. Experience from the recent
financial crisis demonstrates that credit
risk exposure of sponsoring banking
organizations to such structures (and to
the assets of these structures) has in fact
been greater than the agencies
previously estimated, and more
associated with non-contractual risks,
including reputational risk, than the
agencies had previously anticipated. In

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the NPR, the agencies noted situations
in which banking organizations
provided implicit support to some
securitization structures, revolving
structures in particular, to reduce the
likelihood that senior securities of the
structures would experience credit
ratings downgrades.19 These examples
were intended to demonstrate that riskbased capital requirements based solely
on a banking organization’s contractual
exposure may underestimate the true
exposure of a sponsoring banking
organization to the credit risk of
securitization structures and other
VIEs.20
In the NPR, the agencies sought
specific views from commenters, with
supporting data and other
documentation, regarding the types of
VIEs and other special purpose entities
that are more or less likely to elicit
implicit support. The agencies also
sought comment on any types of
consolidated VIEs that might merit a
different risk-based capital treatment
than that which will result from the
implementation of FAS 166 and FAS
167 without any change to regulatory
capital requirements, together with a
detailed explanation and supporting
empirical analysis of why the features
and characteristics of these structure
types merit an alternative treatment,
how the risks to the consolidating
banking organization of the structures
should be measured, and what an
appropriate alternative capital treatment
would be.
Many commenters identified
reputational and operational risks as
most likely to induce a banking
organization to provide implicit support
to a VIE. Some commenters noted that
certain banking organizations did not
follow their peers in providing implicit
support during the recent crisis despite
reputational risks. However,
commenters generally argued that the
risk-based capital rules should be
modified to mitigate the effect of FAS
166 and FAS 167 on risk-based capital
requirements, taking into account risks
borne by third-party investors in VIEs;
a substantial number of commenters
19 Typical structures of this type include
securitizations that are backed by credit card or
HELOC receivables, single- and multi-seller ABCP
conduits, and structured investment vehicles.
20 Some commenters expressed concern that the
accounting changes coupled with the agencies’
proposal would result in duplicative capital
requirements and excessive regulatory capital being
held on a system-wide basis. The agencies
recognize that there will be some overlap in
regulatory capital held by sponsoring and investing
banking organizations in relation to the same assets.
However, the agencies believe this overlap results
in a fair reflection of the risks to which sponsoring
and investing banking organizations are exposed on
an individual basis.

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asserted that risk-based capital
requirements should be limited to a
banking organization’s contractual
exposure to VIEs consolidated under
FAS 167. Other commenters suggested
that the agencies consider using a
sliding-scale to risk weight assets
subject to consolidation under FAS 167
based on the likelihood of the VIE
holding the assets receiving implicit
support, as demonstrated by historical
experience. Some commenters
suggested an implicit support trigger
approach that would require higher
capital requirements based on a
decrease in a VIE’s excess spread (that
is, the amount of income the VIE
receives from assets in excess of that it
pays to holders of its obligations),
deterioration in VIE asset quality,
downward changes in the credit ratings
of the VIE’s obligations, or other adverse
credit events.
Many commenters recommended an
approach to risk weighting assets held
by consolidated VIEs that would
consider each structure independently,
calculate a banking organization’s ‘‘net
exposure’’ to the structure by subtracting
third-party investor interests in the
structure from the structure’s total
assets, and then consider the
appropriate risk weight to be applied to
the resulting net exposure based on the
risk characteristics of the structure.
Some commenters similarly suggested
the agencies adjust risk weights for
securitized assets case-by-case on the
basis of credit risk mitigation
instruments supporting the assets, or
include in regulatory capital some
subordinated debt instruments issued
by consolidated VIEs. Others argued
that the agencies should separate
regulatory capital reporting from GAAP
when establishing regulatory capital
requirements for banking organizations’
exposures to VIEs and look to the way
banking organizations manage VIE
exposures internally to determine
treatment as ‘‘on’’- or- ‘‘off’’ balance sheet
for regulatory capital purposes. Some
commenters suggested that the size and
risk profile of a banking organization
should determine capital requirements
for consolidated assets. Other
commenters suggested the agencies
develop risk weights for consolidated
VIEs based on the agencies’ guidance on
synthetic securitizations. With regard to
specific types of structures, many
commenters asserted that certain multiseller ABCP conduits (as discussed
further below) and non-revolving,
amortizing asset securitizations with
certain features, such as term residential
mortgage-backed securities structures,
should receive more favorable capital

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Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Rules and Regulations
treatment based on their low historical
loss levels to sponsoring banking
organizations or low likelihood of
implicit support. Some commenters also
requested the agencies provide capital
relief for consolidated residential and
commercial mortgage-backed securities
structures in order to aid the real estate
market.
Although commenters provided some
empirical data in support of their
arguments for favorable treatment of
ABCP conduits (as discussed below),
they provided much less data in support
of other proposed alternative risk-based
capital treatments. Commenters
provided some examples of structural
features (such as tax consequences) that
may effectively minimize the possibility
that a sponsoring banking organization
will provide implicit support to certain
structures. They did not, however,
provide an explicit set of criteria,
supported by broad-based empirical
evidence, that the agencies could use to
identify structures with minimal
likelihood of implicit support,
particularly during times of financial
market stress, nor did they identify
alternative risk-based capital treatments
that would appropriately identify and
measure risk and allay the agencies’
concerns regarding regulatory capital
arbitrage (that is, the structuring of
transactions to obtain lower regulatory
capital requirements without a
commensurate reduction in risk).
Commenters also did not empirically
demonstrate the degree of competitive
harm relative to foreign banks and other
competitors that banking organizations
would likely suffer as a result of the
regulatory capital effects of their
implementation of FAS 166 and FAS
167.
The agencies therefore are not
implementing modifications to the riskbased capital rules to provide an
alternative risk-based capital treatment
for assets that will be newly
consolidated on a banking
organization’s balance sheet following
implementation of FAS 166 and FAS
167. The agencies believe that the
optional interim relief provided by this
final rule, through the delay and phasein of the effects of FAS 167 upon riskbased capital requirements as described
above, will give a banking organization
that elects the option adequate time to
adjust its risk profiles to address
competitive concerns and to plan to
develop structural features needed for
future transactions with due
consideration to its regulatory capital
profiles.

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b. Qualifying Total Capital
In the NPR, the agencies sought
comment on whether securitized loans
subject to consolidation on banking
organizations’ balance sheets under FAS
167 would be subject to the same ALLL
provisioning process, including
applicable loss rates, as similar loans
that are not securitized. The agencies
asked for comment on how banking
organizations would reflect the benefits
of risk sharing in cases where investors
in VIEs holding such loans absorb
realized credit losses, and for a
quantification of such benefits and any
other effects of loss sharing, wherever
possible. The agencies also asked
whether they should consider policy
alternatives with regard to the ALLL
provisioning process, including the
limit on ALLL that may be included in
tier 2 capital.
Commenters indicated that the ALLL
provisioning process and amounts for
loans held in VIEs consolidated under
FAS 167 would be the same as for loans
not held in VIEs. Commenters asserted
that the addition to ALLL that would
result from this consolidation would be
significantly greater than the actual
losses contractually borne by the
consolidating banking organization and
would distort the relationship of the
ALLL to the contractual risk of the
consolidating banking organization to
the assets held in the affected VIEs.
Commenters further noted that, because
additions to ALLL are deducted from
retained earnings, the additions have
the effect of reducing tier 1 capital.
Many commenters also noted that a
higher ALLL would result in higher
deferred tax assets (DTAs) 21 and
significantly affect banking
organizations’ regulatory capital ratios
due to the capital rules’ limits on
including DTAs and the ALLL in
regulatory capital.22 Many commenters
requested that the agencies relax or
eliminate the restrictions on including
DTAs in tier 1 capital and the ALLL in
tier 2 capital to mitigate the effects of
21 Under GAAP, a DTA arises as a result of the
recognition of an expense, in this case a loss
provision, for financial reporting purposes in
advance of its recognition as a deduction for income
tax reporting purposes.
22 The agencies’ risk-based capital rules limit the
amount of DTAs dependent upon future taxable
income that may be included in tier 1 capital to the
lesser of two measures: (a) The amount of such
DTAs that a banking organization could reasonably
expect to realize within one year; or (b) ten percent
of tier 1 capital that exists before the deduction of
any disallowed servicing assets, any disallowed
purchased credit card relationships, any disallowed
credit-enhancing interest-only strips, and any
disallowed deferred tax assets. See 12 CFR part 3,
Appendix A, § 2(c)(1)(iii) (OCC); 12 CFR parts 208
and 225, Appendix A § II.B.4 (Board); 12 CFR
325.5(g) (FDIC); and 12 CFR 567.12(h) (OTS).

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4641

consolidation due to the
implementation of FAS 167 on
regulatory capital. Specifically, some
commenters recommended that the
current limit (1.25 percent of riskweighted assets) on the inclusion of the
ALLL in tier 2 capital be increased, or
that the entire ALLL related to the assets
supporting VIEs’ contractual obligations
to third parties be included in tier 2
capital. Other commenters
recommended that all ALLL related to
losses contractually borne by third
parties be eligible for inclusion in tier 1
capital. Commenters also noted that
DTA balances will increase along with
the ALLL, and recommended that either
the current limit on DTAs in regulatory
capital be removed or that all DTAs
arising from ALLL related to the
contractual loss absorption
responsibilities of third parties to
consolidated VIEs be included in tier 1
capital.
Under FAS 167, banking
organizations have several financial
reporting methods for recognizing the
initial and ongoing consolidation of
VIEs. One method is the fair value
option, under which the assets of the
VIE are recorded at fair value upon
consolidation and no associated ALLL is
recognized. Another method is to record
newly consolidated assets at carrying
value, which requires the establishment
of an ALLL at a level appropriate to
cover estimated credit losses.23
Commenters suggested that by not
relaxing the limit on the amount of
ALLL that may be included in tier 2
capital, the agencies may encourage
banking organizations to elect the fair
value option for initial consolidation
and/or ongoing accounting of affected
consolidated VIEs.
The agencies have considered the
concerns raised by commenters with
respect to ALLL provisioning and DTAs
created as a result of a banking
organization’s implementation of FAS
167. The agencies recognize the effects
on tier 1 and tier 2 capital of the
increased ALLL provisioning that will
result from the consolidation of VIEs,
and note the concern of some
commenters that, in some cases, the
provisioning may be disproportionate to
the contractual risks borne by a banking
organization with respect to the
consolidated assets. However, as
described above, a regulatory focus on
contractual exposures may understate a
banking organization’s exposure to loss
23 If a banking organization makes use of a
practicability exception to record the assets at fair
value as of the date FAS 166 and FAS 167 are first
implemented, no associated ALLL is recognized on
that date, but an associated ALLL will be
recognized in future periods.

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with regard to a VIE’s assets that the
banking organization must consolidate
under FAS 167. Moreover, the agencies
have determined that the current limits
on ALLL are appropriate given the
policy benefits of maintaining
consistency among international capital
standards absent compelling policy
justifications for deviating from such
standards. The limit of 1.25 percent of
risk-weighted assets on the amount of
the ALLL that a banking organization
may include in tier 2 capital is a
standard included in the first capital
accord of the Basel Committee on
Banking Supervision (Basel Accord).24
The agencies also note that the current
limit on DTAs that a banking
organization may include in tier 1
capital is currently being considered as
part of an international review of the
components of regulatory capital,
including deductions from capital.
Moreover, commenters generally did not
quantify the effect of FAS 167 on
banking organizations’ ALLLs and
DTAs, and the agencies believe that it
may be difficult to identify on an
ongoing basis the ALLLs and DTAs
associated only with assets newly
subject to consolidation under FAS 167.
For the above reasons, the agencies
have decided not to modify current
limits on the inclusion of the ALLL in
tier 2 capital and of DTAs in tier 1
capital. However, as described in
section II.A.2., this final rule provides
substantial transitional relief from the
agencies’ limits on including ALLL in
tier 2 capital to a banking organization
implementing FAS 167 that elects to
adopt the transition mechanism for riskweighted assets described in section
II.A.1 above. The agencies believe that
this relief, along with the transitional
relief for risk-weighted assets included
in the final rule, will aid banking
organizations with capital planning as
they implement FAS 166 and FAS 167
and adjust their business practices
accordingly.

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2. Leverage Requirement
Under the leverage rule, tier 1 capital
is assessed against a measure of a
banking organization’s total on-balance
sheet assets, net of ALLL and certain
other exposures (leverage ratio).25
Therefore, previously unconsolidated
assets that now must be recognized on
a banking organization’s balance sheet
as a result of its implementation of FAS
24 Basel Committee on Banking Supervision,
International Convergence of Capital Measurement
and Capital Standards (1988), paragraph 21.
25 See 12 CFR 3.2(a) (OCC); 12 CFR part 208,
appendix B § II.b and 12 CFR part 225, appendix
D, § II.b (Board); 12 CFR 325.2(m) (FDIC); 12 CFR
567.5(b)(4) (OTS).

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167 will increase the denominator of the
banking organization’s leverage ratio.
The agencies have maintained the
leverage rule as a balance-sheet
assessment to supplement the risk-based
capital rules and limit the degree to
which a banking organization can
leverage its equity capital base.26 By
design, the leverage rule does not
recognize the risk profile of on-balance
sheet exposures, including any risk
transference associated with those
exposures.
Some commenters suggested, based
on the same risk transference arguments
referred to above with respect to the
risk-based capital rules, that the
agencies exclude the assets of VIEs
consolidated by banking organizations
under FAS 167 from the leverage ratio.
Other commenters urged that the
agencies apply any phase-in of capital
requirements associated with the
implementation of FAS 167 to the
leverage rule as well as the risk-based
capital rules.
Having considered commenters’
views, the anticipated impact of the
implementation of FAS 166 and FAS
167 on banking organizations’ leverage
ratios, and the history and purpose of
the leverage rule, the agencies have
concluded that a delay or phase-in of
the effect of consolidation under FAS
167 on the leverage rule is not
appropriate or justified. The agencies
believe the maintenance of the leverage
rule as a balance-sheet assessment
separate from the assessment of relative
risk is a particularly important feature of
prudential regulation and did not find
evidence that the impact of FAS 166
and FAS 167 on banking organizations’
leverage ratios justifies any alteration of
the leverage rule.
C. Asset-Backed Commercial Paper
Programs
In the NPR, the agencies proposed to
eliminate the ABCP exclusion, which
permits a banking organization to
exclude from risk-weighted assets the
assets of an ABCP program that the
banking organization is required to
consolidate under GAAP and for which
the banking organization acts as
sponsor. Under the current risk-based
capital rules, a banking organization
that elects the ABCP exclusion must
instead assess risk-based capital
requirements only on its contractual
exposures to the program. As proposed
in the NPR, as with all other
consolidated VIEs, a banking
26 12 CFR 3.6(b) and (c) (OCC); 12 CFR part 208,
appendix B, § I.a. and 12 CFR part 225, appendix
D, § I.a (Board); 12 CFR 325.3 (FDIC); 12 CFR 567.5
(OTS).

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organization would be required to
include the assets of a consolidated
ABCP program in risk-weighted assets.
The agencies also proposed to eliminate
the associated provision in the general
risk-based capital rules (incorporated by
reference in the advanced approaches)
that excludes from tier 1 capital the
minority interest in a consolidated
ABCP program not included in a
banking organization’s risk-weighted
assets.
Commenters generally opposed the
proposal to eliminate the ABCP
exclusion, particularly with respect to
customer-focused, multi-seller ABCP
programs (customer conduits). These
commenters argued that such ABCP
programs have a history of low loss rates
(including during the recent financial
crisis) and are important sources of
funding for many businesses. These
commenters also suggested that if the
agencies eliminate the ABCP exclusion,
the increased capital requirement
associated with ABCP programs would
increase the cost of funding and
decrease credit availability for
businesses that have used customer
conduits to fund their operations, and
therefore would adversely affect the
economy and financial markets.
Commenters also argued that the
proposed elimination of the ABCP
exclusion would raise significant
competitive equity concerns for
domestic banking organizations relative
to foreign banks and domestic entities
not subject to banking regulation. Some
commenters additionally argued that the
elimination of the ABCP exclusion
would decrease incentives for banking
organizations to transfer risk and might
encourage banking organizations to
invest in riskier, higher yield assets than
those typically associated with
consumer conduits. One commenter
suggested that elimination of the ABCP
exclusion was appropriate where
liquidity facilities act as credit
enhancement or where affiliates of the
conduit sponsor are the largest holder of
the ABCP obligations.
Additionally, in response to the
agencies’ proposal, a number of
commenters suggested that the agencies
allow early adoption of the advanced
approaches rules’ Internal Assessment
Approach (IAA) methodology 27 for risk
weighting these assets, or delay
27 See 12 CFR part 3, appendix C, (OCC) § 44; 12
CFR part 208, appendix F, § 44; and 12 CFR part
225, appendix G, § 44 (Board); 12 CFR part 325,
appendix D, § 44 (FDIC); 12 CFR 567, Appendix C,
§ 44 (OTS). Qualifying banking organizations using
the IAA may calculate risk-weighted asset amounts
for securitization exposures (as defined in the
advanced approaches rule) to qualifying ABCP
programs by using an internal credit assessment
process mapped to equivalent external ratings.

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eliminating the ABCP exclusion until
banking organizations could operate
fully under the advanced approaches
rules. Other commenters urged the
agencies not to implement the proposal
to eliminate the ABCP exclusion at all,
particularly for customer conduits.
The agencies have weighed the
concerns raised by commenters, as
described above, related to the proposal
to eliminate the ABCP exclusion from
the risk-based capital rules, against the
agencies’ own concerns regarding the
possibility of sponsors providing
implicit support to ABCP programs and
regulatory capital arbitrage, among
others. The agencies acknowledge that
customer conduits appear to present a
lower risk of loss to the sponsoring
banking organization relative to other
ABCP programs. However, recent events
have raised serious questions about the
original rationale for allowing the
exclusion of consolidated ABCP
programs from risk-weighted assets. As
the agencies noted in the NPR, the 2004
implementation of the ABCP exclusion
was based on the agencies’ belief that
sponsoring banking organizations’ risk
exposure to these entities was limited to
their contractual exposure. However, as
a result of some banking organizations
having provided implicit support to a
number of ABCP programs they
sponsored during the recent financial
turmoil, the agencies have observed that
the premise of a contractual limit on
risk was incorrect for some ABCP
programs. In addition, and
notwithstanding commenters’ assertions
to the contrary, the agencies believe that
the type of customer conduit advocated
by commenters to be considered for
preferential exclusion from riskweighted assets cannot be distinguished
from other ABCP programs to a degree
of certainty that would effectively
mitigate the risk of regulatory capital
arbitrage. Furthermore, commenters did
not describe the features and
characteristics of customer conduits that
would effectively mitigate the risk of a
banking organization providing implicit
support to sponsored structures under
the broadest range of circumstances.
The agencies are sensitive to
competitive concerns and recognize that
some ABCP programs include generally
high credit-quality assets. However,
given the absence of a workable
alternative proposal that satisfactorily
addresses the agencies’ concerns about
regulatory capital arbitrage and implicit
support, the agencies have decided to
eliminate as proposed the ABCP
exclusion, subject to the delay and
phase-in described above.
With respect to the recommendation
that the agencies allow early adoption of

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the IAA, the agencies note that the IAA
is applicable exclusively to a banking
organization’s exposures to off-balance
sheet ABCP programs and not to a
program’s underlying assets when
reported on balance sheet. Moreover,
the IAA, like the ABCP exclusion,
focuses on a banking organization’s
contractual exposures to an ABCP
conduit. The IAA does not capture
implicit support and thus an extension
of the IAA to consolidated ABCP
programs would not sufficiently reflect
the risk to a sponsoring banking
organization of such programs.
D. Reservation of Authority
The NPR proposed a new reservation
of authority for the risk-based capital
rules specifying that a banking
organization’s primary Federal
supervisor would have the authority to
require the banking organization to treat
an off-balance sheet VIE (or similar
entity) as if it were consolidated onto
the banking organization’s balance
sheet. The banking organization would
have to hold capital against the entity’s
exposures for risk-based capital
purposes if the primary Federal
supervisor determined that the banking
organization’s exposure or other
relationship to the entity was not
commensurate with the actual risk
relationship of the banking organization
to the entity.
The agencies received little comment
with respect to the proposed reservation
of authority. The few comments
received regarding the proposed
reservation of authority suggested that it
be used in conjunction with recognition
of contractual risk transfer. One
commenter opposed the reservation of
authority as proposed and requested
that the agencies specify standards for
the exercise of the authority. The
agencies asked in the NPR if there are
any features and characteristics of
transactions not subject to consolidation
on banking organizations’ balance
sheets under GAAP as modified by FAS
166 and FAS 167 that should be
recognized as on-balance sheet
exposures for regulatory capital
purposes to more appropriately reflect
risk. Commenters generally stated that
they were not aware of any such
transactions. Many commenters also
asserted that such transactions were
unlikely.
As stated in the NPR, the agencies
believe the reservation of authority is
essential to address instances when a
banking organization structures a
financial transaction with a VIE to avoid
consolidation under FAS 167, and the
resulting capital treatment is not
commensurate with all risks of the

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banking organization to the VIE,
including non-contractual risks. The
agencies have therefore decided to
incorporate the reservation of authority
in their risk-based capital rules as
proposed in the NPR.
E. Other Related Matters
1. Department of the Treasury’s Home
Affordable Mortgage Program
In the NPR, the agencies solicited
comment on whether banking
organizations that service securitized
residential mortgages, participate in the
United States Department of the
Treasury’s Home Affordable Mortgage
Program (HAMP), and receive certain
incentive payments in connection with
the program, would be required under
FAS 167 to consolidate VIEs holding
such mortgages solely due to loan
modifications under HAMP. The
agencies also asked if such
consolidation were required, whether
such assets should be included in
regulatory capital requirements and
what alternative capital treatment may
be appropriate.
Commenters generally did not think
that incentive payments under HAMP
would independently trigger
consolidation under FAS 167. Most also
argued that if such consolidation were
to occur as a result of actions related to
or required by HAMP participation,
regulatory capital treatment should be
modified with respect to the relevant
consolidated mortgage loan assets.
The agencies agree with commenters’
assessment that it is unlikely that
incentive payments under HAMP
independently would cause servicers
participating in HAMP to consolidate
VIEs holding mortgage loans modified
under HAMP. The agencies therefore do
not see a basis for any modification of
their capital requirements in relation to
incentive payments made pursuant to
HAMP.
2. Denial of Extension of Comment
Period
A few commenters requested that the
agencies extend the NPR comment
period. As noted above, the agencies
received approximately 41 comments
following the publication of the NPR,
which indicates that commenters had
adequate time to express their views.
Furthermore, the possible regulatory
capital implications of FAS 166 and
FAS 167 were publicly known for
months prior to the NPR and several
commenters expressed viewpoints on
these matters to the agencies well before
the publication of the NPR. The
agencies therefore have concluded that
the 30-day comment period provided

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adequate time for commenters to
provide views to the agencies and deny
requests to extend the NPR comment
period.
VI. Regulatory Analysis
Riegle Community Development and
Regulatory Improvement Act
Section 302 of Riegle Community
Development and Regulatory
Improvement Act 28 (RCDRIA) generally
requires that regulations prescribed by
Federal banking agencies which impose
additional reporting, disclosures or
other new requirements on insured
depository institutions take effect on the
first day of a calendar quarter unless an
agency finds good cause that the
regulations should become effective
sooner and publishes its finding with
the rule. The effective date of this rule
is March 29, 2010.29 The agencies
believe that it is important to make this
final rule effective before banking
organizations generally must calculate
their regulatory risk-based capital ratios
at the end of the first quarter of 2010.
This will allow banking organizations to
implement the rule prior to calculating
their first quarter 2010 risk-based capital
ratios and mitigate possible negative
impacts on securitization and financial
markets as described in section II.A
above. The RCDRIA also provides that
an entity that is subject to such a
regulation may elect to comply with the
regulation before its effective date.30
Accordingly, banking organizations may
elect to comply with this final rule
before the effective date (as of the
beginning of their first annual reporting
period that begins after November 15,
2009).
Regulatory Flexibility Act

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In accordance with Section 3(a) of the
Regulatory Flexibility Act (RFA),31 the
agencies are publishing a final
regulatory flexibility analysis for
amendments to their capital rules.
Under regulations issued by the Small
Business Administration,32 a small
entity includes a commercial bank,
BHC, or savings association with assets
of $175 million or less (a small banking
organization). As of September 30, 2009,
there were approximately 2,484 small
BHCs, 379 small savings associations,
722 small national banks, 419 small
State member banks, and 2,818 small
28 12

U.S.C. 4802.
final rule is a ‘‘major rule’’ under the
Congressional Review Act and therefore may not
take effect until at least 60 days after publication
in the Federal Register. See 5 U.S.C. 801.
30 12 U.S.C. 4802(b)(2).
31 5 U.S.C. 601 et seq.
32 See 13 CFR 121.201.
29 This

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State nonmember banks. As a general
matter, the Board’s general risk-based
capital rules apply only to a BHC that
has consolidated assets of $500 million
or more. Therefore, the proposed
changes to the Board’s general riskbased capital rules for BHCs will not
affect small BHCs.
The agencies have determined that
the final rule will not have a significant
impact on a substantial number of small
banking organizations. Small banking
organizations do not sponsor ABCP
programs and very few will be required
to consolidate VIEs as a result of
implementing FAS 167. The agencies
expect that few small banking
organizations will elect to implement
the transition mechanism set forth in
the final rule and they will not be
affected by the removal of the ABCP
exclusion. Therefore, the agencies
certify that the final rule will not have
a significant economic impact on a
substantial number of small banking
organizations.
Paperwork Reduction Act
In accordance with the requirements
of the Paperwork Reduction Act of
1995,33 the agencies have reviewed the
final rule. The Board reviewed the final
rule under the authority delegated to the
Board by the Office of Management and
Budget. The Board, the FDIC, and the
OCC note that instructions related to
ABCP conduits in Schedule RC–R of the
Consolidated Reports of Condition and
Income 34 and Schedule HC–R of the
Consolidated Financial Statements for
Bank Holding Companies 35 will require
revision.36 The Board, the FDIC, and the
OCC also note that the instructions for
other items in Schedules RC–R and HC–
R will require revisions related to the
delay and phase-in options included in
the final rule. If these revisions are
determined to be significant, the
revisions would be incorporated into a
proposal that the agencies would
publish with a request for comment in
accordance with the requirements of the
PRA.
Executive Order 12866
Executive Order 12866 requires
Federal agencies to prepare a regulatory
impact analysis for agency actions that
are found to be ‘‘significant regulatory
33 44

U.S.C. 3506.
Nos. 7100–0036, 1557–0081, and 3064–
0052; FFIEC 031 and 041.
35 OMB No. 7100–0128; FR Y–9C.
36 OTS notes that the Thrift Financial Report
(TFR) does not need any revisions, given that it
does not currently ask for specific information like
the call report. OTS does not anticipate the need to
revise the TFR, but if the need arises OTS would
request comment in accordance with the
requirements of the PRA.
34 OMB

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actions.’’ Significant regulatory actions
include, among other things,
rulemakings that ‘‘have an annual effect
on the economy of $100 million or more
or adversely affect in a material way the
economy, a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
State, local, or Tribal governments or
communities.’’ Regulatory actions that
satisfy one or more of these criteria are
referred to as ‘‘economically significant
regulatory actions.’’
The OCC and OTS have determined
that this rulemaking is an economically
significant regulatory action for
purposes of Executive Order 12866.
However, because the rule addresses
changes to accounting standards that
will become effective for national banks
and savings associations as of the
beginning of their first annual reporting
period that begins after November 15,
2009, the issuance of this rule is subject
to the procedures set forth in Section
6(a)(3)(D) of Executive Order 12866.
OCC/OTS Unfunded Mandates Reform
Act of 1995 Determination
The Unfunded Mandates Reform Act
of 1995 37 (UMRA) requires that an
agency prepare a budgetary impact
statement before promulgating a rule
that includes a Federal mandate that
may result in the expenditure by State,
local, and Tribal governments, in the
aggregate, or by the private sector of
$100 million or more (adjusted annually
for inflation) in any one year. If a
budgetary impact statement is required,
section 205 of the UMRA also requires
an agency to identify and consider a
reasonable number of regulatory
alternatives before promulgating a rule.
The OCC and the OTS each have
determined that its proposed rule will
not result in expenditures by State,
local, and Tribal governments, in the
aggregate, or by the private sector, of
$100 million or more in any one year.
Accordingly, neither the OCC nor the
OTS has prepared a budgetary impact
statement or specifically addressed the
regulatory alternatives considered.
Use of Plain Language
Section 722 of the Gramm-LeachBliley Act 38 requires the Federal
banking agencies to use plain language
in all proposed and final rules
published after January 1, 2000. The
agencies invited comment on how to
make the proposed rule easier to
understand. The agencies received no
comment on plain language.
37 See

Public Law 104–4.
Law 106–102.

38 Public

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Nevertheless, the agencies have
endeavored to present this final rule,
and all their capital rules, in a manner
that is as brief, comprehensible, and
straightforward as possible, in light of
the nature and complexity of the subject
matter.
List of Subjects
12 CFR Part 3
Administrative practice and
procedure, Banks, Banking, Capital,
National banks, Reporting and
recordkeeping requirements, Risk.
12 CFR Part 208
Confidential business information,
Crime, Currency, Federal Reserve
System, Mortgages, Reporting and
recordkeeping requirements, Securities.
12 CFR Part 225
Administrative practice and
procedure, Banks, Banking, Federal
Reserve System, Holding companies,
Reporting and recordkeeping
requirements, Securities.

Appendix A to Part 3—Risk-Based
Capital Guidelines

12 CFR Part 325
Administrative practice and
procedure, Banks, Banking, Capital
Adequacy, Reporting and recordkeeping
requirements, Savings associations,
State nonmember banks.
12 CFR Part 567
Capital, Reporting and recordkeeping
requirements, Risk, Savings
associations.
Department of the Treasury
Office of the Comptroller of the
Currency
12 CFR Chapter I
Authority and Issuance
For the reasons stated in the common
preamble, the Office of the Comptroller
of the Currency is amending Part 3 of
chapter I of Title 12, Code of Federal
Regulations as follows:
PART 3—MINIMUM CAPITAL RATIOS;
ISSUANCE OF DIRECTIVES
1. The authority citation for part 3
continues to read as follows:

■

Authority: 12 U.S.C. 93a, 161, 1818,
1828(n), 1828 note, 1831n note, 1835, 3907,
and 3909.

2. Section 3.4 is amended by adding
paragraph (c) to read as follows:

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■

§ 3.4

Reservation of authority.

*

*
*
*
*
(c) The OCC may find that the capital
treatment for an exposure not subject to
consolidation on the bank’s balance
sheet does not appropriately reflect the

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risks imposed on the bank. Accordingly,
the OCC may require the bank to treat
the exposure as if it were consolidated
onto the bank’s balance sheet for the
purpose of determining compliance
with the bank’s minimum risk-based
capital requirements set forth in
Appendix A or Appendix C to this Part.
The OCC will look to the substance of
and risk associated with the transaction
as well as other relevant factors the OCC
deems appropriate in determining
whether to require such treatment and
in determining the bank’s compliance
with minimum risk-based capital
requirements.
■ 3. In appendix A to Part 3:
■ a. In section 2, remove and reserve
paragraph (a)(3)(ii);
■ b. In section 3, remove and reserve
paragraph (a)(5) and revise paragraph
(a)(6); and
■ c. Revise section 5.
The revisions read as set forth below.

*

*

*

*

*

Section 3. * * *

*

*

*

*

*

(a) * * *
(6) Other variable interest entities subject
to consolidation. If a bank is required to
consolidate the assets of a variable interest
entity under generally accepted accounting
principles, the bank must assess a risk-based
capital charge based on the appropriate risk
weight of the consolidated assets in
accordance with sections 3(a) and 4 of this
appendix A. Any direct credit substitutes and
recourse obligations (including residual
interests), and loans that a bank may provide
to such a variable interest entity are not
subject to a capital charge under section 4 of
this appendix A.
Section 5. Optional transition provisions
related to the implementation of
consolidation requirements under FAS 167.
(a) This section 5 provides optional
transition provisions for a national bank that
is required for financial and regulatory
reporting purposes, as a result of its
implementation of Statement of Financial
Accounting Standards No. 167, Amendments
to FASB Interpretation No. 46(R) (FAS 167),
to consolidate certain variable interest
entities (VIEs) as defined under United States
generally accepted accounting principles
(GAAP). These transition provisions apply
through the end of the fourth quarter
following the date of a bank’s
implementation of FAS 167 (implementation
date).
(b) Exclusion period. (1) Exclusion of riskweighted assets for the first and second
quarters. For the first two quarters after the
implementation date (exclusion period),
including for the two calendar quarter-end
regulatory report dates within those quarters,
a bank may exclude from risk-weighted
assets:
(i) Subject to the limitations in paragraph
(d) of this section 5, assets held by a VIE,

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4645

provided that the following conditions are
met:
(A) The VIE existed prior to the
implementation date;
(B) The bank did not consolidate the VIE
on its balance sheet for calendar quarter-end
regulatory report dates prior to the
implementation date;
(C) The bank must consolidate the VIE on
its balance sheet beginning as of the
implementation date as a result of its
implementation of FAS 167; and
(D) The bank excludes all assets held by
VIEs described in paragraphs (b)(1)(i)(A)
through (C) of this section 5; and
(ii) Subject to the limitations of paragraph
(d) of this section 5, assets held by a VIE that
is a consolidated asset-backed commercial
paper (ABCP) program, provided that the
following conditions are met:
(A) The bank is the sponsor of the ABCP
program;
(B) Prior to the implementation date, the
bank consolidated the VIE onto its balance
sheet under GAAP and excluded the VIE’s
assets from the bank’s risk-weighted assets;
and
(C) The bank chooses to exclude all assets
held by ABCP program VIEs described in
paragraphs (b)(1)(ii)(A) and (B) of this section
5.
(2) Risk-weighted assets during exclusion
period. During the exclusion period,
including the two calendar quarter-end
regulatory report dates within the exclusion
period, a bank adopting the optional
provisions of this paragraph (b) of this
section 5 must calculate risk-weighted assets
for its contractual exposures to the VIEs
referenced in paragraph (b)(1) of this section
5 on the implementation date and include
this calculated amount in its risk-weighted
assets. Such contractual exposures may
include direct-credit substitutes, recourse
obligations, residual interests, liquidity
facilities, and loans.
(3) Inclusion of ALLL in Tier 2 capital for
the first and second quarters. During the
exclusion period, including for the two
calendar quarter-end regulatory report dates
within the exclusion period, a bank that
excludes VIE assets from risk-weighted assets
pursuant to paragraph (b)(1) of this section
may include in Tier 2 capital the full amount
of the allowance for loan and lease losses
(ALLL) calculated as of the implementation
date that is attributable to the assets it
excludes pursuant to paragraph (b)(1) of this
section 5 (inclusion amount). The amount of
ALLL includable in Tier 2 capital in
accordance with this paragraph shall not be
subject to the limitations set forth in section
2(b)(1) of this Appendix A.
(c) Phase-in period. (1) Exclusion amount.
For purposes of this paragraph (c), exclusion
amount is defined as the amount of riskweighted assets excluded in paragraph (b)(1)
of this section as of the implementation date.
(2) Risk-weighted assets during the third
and fourth quarters. A bank that excludes
assets of consolidated VIEs from riskweighted assets pursuant to paragraph (b)(1)
of this section may, for the third and fourth
quarters after the implementation date
(phase-in period), including for the two
calendar quarter-end regulatory report dates

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within those quarters, exclude from riskweighted assets 50 percent of the exclusion
amount, provided that the bank may not
include in risk-weighted assets pursuant to
this paragraph an amount less than the
aggregate risk-weighted assets calculated
pursuant to paragraph (b)(2) of this section.
(3) Inclusion of ALLL in Tier 2 capital
during the third and fourth quarters. A bank
that excludes assets of consolidated VIEs
from risk-weighted assets pursuant to
paragraph (c)(2) of this section may, for the
phase-in period, include in Tier 2 capital 50
percent of the inclusion amount it included
in Tier 2 capital during the exclusion period,
notwithstanding the limit on including ALLL
in Tier 2 capital in section 2(b)(1) of this
Appendix A.
(d) Implicit recourse limitation.
Notwithstanding any other provision in this
section 5, assets held by a VIE to which the
bank has provided recourse through credit
enhancement beyond any contractual
obligation to support assets it has sold may
not be excluded from risk-weighted assets.

*

*
*
*
*
4. In Appendix C to part 3, amend the
Table of Contents by adding a new Part
IX and Section 81 as follows:

■

Appendix C to Part 3—Capital
Adequacy Guidelines for Banks:
Internal-Ratings-Based and Advanced
Measurement Approaches
Part I—General Provisions
Part IX—Transition Provisions
Section 81—Optional Transition Provisions
Related to the Implementation of
Consolidation Requirements Under FAS 167

5. Further amend appendix C to Part
3 as follows:
■ a. In section 1, redesignate paragraph
(c)(3) as paragraph (c)(4), and add a new
paragraph (c)(3); and
■ b. Remove section 42(l) and
redesignate section 42(m) as section
42(l).
The addition reads as set forth below.
■

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Appendix C to Part 3—Capital
Adequacy Guidelines for Banks:
Internal-Ratings-Based and Advanced
Measurement Approaches
Section 1. * * *
(c) * * *
(3) Regulatory capital treatment of
unconsolidated entities. If the OCC
determines that the capital treatment for a
bank’s exposure or other relationship to an
entity not consolidated on the bank’s balance
sheet is not commensurate with the actual
risk relationship of the bank to the entity, for
risk-based capital purposes, it may require
the bank to treat the entity as if it were
consolidated onto the bank’s balance sheet
and require the bank to hold capital against
the entity’s exposures. The OCC will look to
the substance of and risk associated with the
transaction as well as other relevant factors
the OCC deems appropriate in determining
whether to require such treatment and in
determining the bank’s compliance with

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minimum risk-based capital requirements. In
making a determination under this
paragraph, the OCC will apply notice and
response procedures in the same manner and
to the same extent as the notice and response
procedures in 12 CFR 3.12.

6. Further amend Appendix C to part
3 by adding a new part IX and section
81 to read as follows:

■

Appendix C to Part 3—Capital
Adequacy Guidelines for Banks:
Internal-Ratings-Based and Advanced
Measurement Approaches
*

*

*

*

*

Part IX—Transition Provisions
Section 81—Optional Transition Provisions
Related to the Implementation of
Consolidation Requirements Under FAS 167
(a) Scope, applicability, and purpose. This
section 81 provides optional transition
provisions for a bank that is required for
financial and regulatory reporting purposes,
as a result of its implementation of Statement
of Financial Accounting Standards No. 167,
Amendments to FASB Interpretation No.
46(R) (FAS 167), to consolidate certain
variable interest entities (VIEs) as defined
under GAAP. These transition provisions
apply through the end of the fourth quarter
following the date of a bank’s
implementation of FAS 167 (implementation
date).
(b) Exclusion period. (1) Exclusion of riskweighted assets for the first and second
quarters. For the first two quarters after the
implementation date (exclusion period),
including for the two calendar quarter-end
regulatory report dates within those quarters,
a bank may exclude from risk-weighted
assets:
(i) Subject to the limitations in paragraph
(d) of this section 81, assets held by a VIE,
provided that the following conditions are
met:
(A) The VIE existed prior to the
implementation date;
(B) The bank did not consolidate the VIE
on its balance sheet for calendar quarter-end
regulatory report dates prior to the
implementation date;
(C) The bank must consolidate the VIE on
its balance sheet beginning as of the
implementation date as a result of its
implementation of FAS 167; and
(D) The bank chooses to exclude all assets
held by VIEs described in paragraphs
(b)(1)(i)(A) through (C) of this section 81; and
(ii) Subject to the limitations in paragraph
(d) of this section 81, assets held by a VIE
that is a consolidated asset-backed
commercial paper (ABCP) program, provided
that the following conditions are met:
(A) The bank is the sponsor of the ABCP
program;
(B) Prior to the implementation date, the
bank consolidated the VIE onto its balance
sheet under GAAP and excluded the VIE’s
assets from the bank’s risk-weighted assets;
and
(C) The bank excludes all assets held by
ABCP program VIEs described in paragraphs
(b)(1)(ii)(A) and (B) of this section 81.

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(2) Risk-weighted assets during exclusion
period. During the exclusion period,
including for the two calendar quarter-end
regulatory report dates within the exclusion
period, a bank adopting the optional
provisions in paragraph (b) of this section
must calculate risk-weighted assets for its
contractual exposures to the VIEs referenced
in paragraph (b)(1) of this section 81 on the
implementation date and include this
calculated amount in risk-weighted assets.
Such contractual exposures may include
direct-credit substitutes, recourse obligations,
residual interests, liquidity facilities, and
loans.
(3) Inclusion of ALLL in Tier 2 capital for
the first and second quarters. During the
exclusion period, including for the two
calendar quarter-end regulatory report dates
within the exclusion period, a bank that
excludes VIE assets from risk-weighted assets
pursuant to paragraph (b)(1) of this section 81
may include in Tier 2 capital the full amount
of the ALLL calculated as of the
implementation date that is attributable to
the assets it excludes pursuant to paragraph
(b)(1) of this section 81 (inclusion amount).
The amount of ALLL includable in Tier 2
capital in accordance with this paragraph
shall not be subject to the limitations set
forth in section 13(a)(2) and (b) of this
Appendix C.
(c) Phase-in period. (1) Exclusion amount.
For purposes of this paragraph (c), exclusion
amount is defined as the amount of riskweighted assets excluded in paragraph (b)(1)
of this section as of the implementation date.
(2) Risk-weighted assets for the third and
fourth quarters. A bank that excludes assets
of consolidated VIEs from risk-weighted
assets pursuant to paragraph (b)(1) of this
section may, for the third and fourth quarters
after the implementation date (phase-in
period), including for the two calendar
quarter-end regulatory report dates within
those quarters, exclude from risk-weighted
assets 50 percent of the exclusion amount,
provided that the bank may not include in
risk-weighted assets pursuant to this
paragraph an amount less than the aggregate
risk-weighted assets calculated pursuant to
paragraph (b)(2) of this section 81.
(3) Inclusion of ALLL in Tier 2 capital for
the third and fourth quarters. A bank that
excludes assets of consolidated VIEs from
risk-weighted assets pursuant to paragraph
(c)(2) of this section may, for the phase-in
period, include in Tier 2 capital 50 percent
of the inclusion amount it included in Tier
2 capital during the exclusion period,
notwithstanding the limit on including ALLL
in Tier 2 capital in section 13(a)(2) and (b)
of this Appendix.
(d) Implicit recourse limitation.
Notwithstanding any other provision in this
section 81, assets held by a VIE to which the
bank has provided recourse through credit
enhancement beyond any contractual
obligation to support assets it has sold may
not be excluded from risk-weighted assets.

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Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Rules and Regulations
Board of Governors of the Federal
Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons stated in the common
preamble, the Board of Governors of
Federal Reserve System amends parts
208 and 225 of Chapter II of title 12 of
the Code of Federal Regulations as
follows:

■

PART 208—MEMBERSHIP OF STATE
BANKING INSTITUTIONS IN THE
FEDERAL RESERVE SYSTEM
(REGULATION H)
7. The authority citation for part 208
continues to read as follows:

■

Authority: 12 U.S.C. 24, 36, 92a, 93a,
248(a), 248(c), 321–338a, 371d, 461, 481–486,
601, 611, 1814, 1816, 1818,
1820(d)(9),1833(j), 1828(o)1831, 1831o,
1831p–1, 1831r–1, 1831w, 1831x 1835a,
1882, 2901–2907, 3105, 3310, 3331–3351,
and 3905–3909; 15 U.S.C. 78b, 78I(b),
78l(i),780–4(c)(5), 78q, 78q–1, and 78w,
1681s, 1681w, 6801, and 6805; 31 U.S.C.
5318; 42 U.S.C. 4012a, 4104a, 4104b, 4106
and 4128.

8. In appendix A to part 208:
A. Amend section I by adding a new
paragraph immediately prior to the last
undesignated paragraph;
■ B. Amend paragraph c. of section
II.A.1 by removing the last sentence;
■ C. Remove paragraph b. of section
III.B.6 and redesignate paragraph c. of
section III.B.6 as paragraph b.;
■ D. Add new section IV.C after
attachment 1.
The additions and revisions read as
follows:
■
■

Appendix A to Part 208—Capital
Adequacy Guidelines for State Member
Banks: Risk-Based Measure

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I. * * *
The Federal Reserve may determine that
the regulatory capital treatment for a bank’s
exposure or other relationship to an entity
not consolidated on the bank’s balance sheet
is not commensurate with the actual risk
relationship of the bank to the entity. In
making this determination, the Federal
Reserve may require the bank to treat the
entity as if it were consolidated onto the
balance sheet of the bank for risk-based
capital purposes and calculate the
appropriate risk-based capital ratios
accordingly, all as specified by the Federal
Reserve.

*

*

*

*

*

IV. Minimum Supervisory Ratios and
Standards

*

*

*

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*

*

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C. Optional Transition Provisions Related to
the Implementation of Consolidation
Requirements Under FAS 167
This section IV.C. provides optional
transition provisions for a bank that is
required for financial and regulatory
reporting purposes, as a result of its
implementation of Statement of Financial
Accounting Standards No. 167, Amendments
to FASB Interpretation No. 46(R) (FAS 167),
to consolidate certain variable interest
entities (VIEs) as defined under United States
generally accepted accounting principles
(GAAP). These transition provisions apply
through the end of the fourth quarter
following the date of a bank’s
implementation of FAS 167 (implementation
date).
1. Exclusion Period
a. Exclusion of risk-weighted assets for the
first and second quarters. For the first two
quarters after the implementation date
(exclusion period), including for the two
calendar quarter-end regulatory report dates
within those quarters, a bank may exclude
from risk-weighted assets:
i. Subject to the limitations in section
IV.C.3, assets held by a VIE, provided that the
following conditions are met:
(1) The VIE existed prior to the
implementation date,
(2) The bank did not consolidate the VIE
on its balance sheet for calendar quarter-end
regulatory report dates prior to the
implementation date,
(3) The bank must consolidate the VIE on
its balance sheet beginning as of the
implementation date as a result of its
implementation of FAS 167, and
(4) The bank excludes all assets held by
VIEs described in paragraphs C.1.a.i.(1)
through (3) of this section IV.C.1.a.i; and
ii. Subject to the limitations in section
IV.C.3, assets held by a VIE that is a
consolidated ABCP program, provided that
the following conditions are met:
(1) The bank is the sponsor of the ABCP
program,
(2) Prior to the implementation date, the
bank consolidated the VIE onto its balance
sheet under GAAP and excluded the VIE’s
assets from the bank’s risk-weighted assets,
and
(3) The bank chooses to exclude all assets
held by ABCP program VIEs described in
paragraphs (1) and (2) of this section
IV.C.1.a.ii.
b. Risk-weighted assets during exclusion
period. During the exclusion period,
including for the two-calendar quarter-end
regulatory report dates within the exclusion
period, a bank adopting the optional
provisions in section IV.C.1.a must calculate
risk-weighted assets for its contractual
exposures to the VIEs referenced in section
IV.C.1.a on the implementation date and
include this calculated amount in its riskweighted assets. Such contractual exposures
may include direct-credit substitutes,
recourse obligations, residual interests,
liquidity facilities, and loans.
c. Inclusion of allowance for loan and lease
losses in tier 2 capital for the first and second
quarters. During the exclusion period,
including for the two calendar quarter-end

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4647

regulatory report dates within the exclusion
period, a bank that excludes VIE assets from
risk-weighted assets pursuant to section
IV.C.1.a may include in tier 2 capital the full
amount of the allowance for loan and lease
losses (ALLL) calculated as of the
implementation date that is attributable to
the assets it excludes pursuant to section
IV.C.1.a (inclusion amount). The amount of
ALLL includable in tier 2 capital in
accordance with this paragraph shall not be
subject to the limitations set forth in section
II.A.2.a. of this Appendix.
2. Phase-In Period
a. Exclusion amount. For purposes of this
section IV.C., exclusion amount is defined as
the amount of risk-weighted assets excluded
in section IV.C.1.a. as of the implementation
date.
b. Risk-weighted assets for the third and
fourth quarters. A bank that excludes assets
of consolidated VIEs from risk-weighted
assets pursuant to section IV.C.1.a. may, for
the third and fourth quarters after the
implementation date (phase-in period),
including for the two calendar quarter-end
regulatory report dates within those quarters,
exclude from risk-weighted assets 50 percent
of the exclusion amount, provided that the
bank may not include in risk-weighted assets
pursuant to this paragraph an amount less
than the aggregate risk-weighted assets
calculated pursuant to section IV.C.1.b.
c. Inclusion of ALLL in tier 2 capital for the
third and fourth quarters. A bank that
excludes assets of consolidated VIEs from
risk-weighted assets pursuant to section
IV.C.2.b. may, for the phase-in period,
include in tier 2 capital 50 percent of the
inclusion amount it included in tier 2 capital
during the exclusion period, notwithstanding
the limit on including ALLL in tier 2 capital
in section II.A.2.a. of this Appendix.
3. Implicit recourse limitation.
Notwithstanding any other provision in this
section IV.C., assets held by a VIE to which
the bank has provided recourse through
credit enhancement beyond any contractual
obligation to support assets it has sold may
not be excluded from risk-weighted assets.

9. In appendix F to part 208:
A. In section 1(c), redesignate
paragraph (3) as paragraph (4), and add
a new paragraph (3);
■ B. Remove section 42(l) and
redesignate section 42(m) as section
42(l);
■ C. Add a new part IX and section 81
at the end of appendix F.
The additions read as follows:
■
■

Appendix F to Part 208—Capital
Adequacy Guidelines for Banks:
Internal-Ratings-Based and Advanced
Measurement Approaches
*

*

*

*

*

*

*

*

1. * * *
(c) * * *

*

*

(3) Regulatory capital treatment of
unconsolidated entities. The Federal Reserve
may determine that the regulatory capital
treatment for a bank’s exposure or other

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Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Rules and Regulations

relationship to an entity not consolidated on
the bank’s balance sheet is not commensurate
with the actual risk relationship of the bank
to the entity. In making this determination,
the Federal Reserve may require the bank to
treat the entity as if it were consolidated onto
the balance sheet of the bank for risk-based
capital purposes and calculate the
appropriate risk-based capital ratios
accordingly, all as specified by the Federal
Reserve.

*

*

*

*

*

jlentini on DSKJ8SOYB1PROD with RULES2

Part IX—Transition Provisions
Section 81—Optional Transition Provisions
Related to the Implementation of,
Consolidation Requirements Under FAS 167
(a) Scope, applicability, and purpose. This
section 81 provides optional transition
provisions for a State member bank that is
required for financial and regulatory
reporting purposes, as a result of its
implementation of Statement of Financial
Accounting Standards No. 167, Amendments
to FASB Interpretation No. 46(R) (FAS 167),
to consolidate certain variable interest
entities (VIEs) as defined under GAAP. These
transition provisions apply through the end
of the fourth quarter following the date of a
bank’s implementation of FAS 167
(implementation date).
(b) Exclusion period.
(1) Exclusion of risk-weighted assets for the
first and second quarters. For the first two
quarters after the implementation date
(exclusion period), including for the two
calendar quarter-end regulatory report dates
within those quarters, a bank may exclude
from risk-weighted assets:
(i) Subject to the limitations in paragraph
(d) of this section 81, assets held by a VIE,
provided that the following conditions are
met:
(A) The VIE existed prior to the
implementation date,
(B) The bank did not consolidate the VIE
on its balance sheet for calendar quarter-end
regulatory report dates prior to the
implementation date,
(C) The bank must consolidate the VIE on
its balance sheet beginning as of the
implementation date as a result of its
implementation of FAS 167, and
(D) The bank excludes all assets held by
VIEs described in paragraphs (b)(1)(i)(A)
through (C) of this section 81; and
(ii) Subject to the limitations in paragraph
(d) of this section 81, assets held by a VIE
that is a consolidated asset-backed
commercial paper (ABCP) program, provided
that the following conditions are met:
(A) The bank is the sponsor of the ABCP
program,
(B) Prior to the implementation date, the
bank consolidated the VIE onto its balance
sheet under GAAP and excluded the VIE’s
assets from the bank’s risk-weighted assets,
and
(C) The bank chooses to exclude all assets
held by ABCP program VIEs described in
paragraphs (b)(1)(ii)(A) and (B) of this section
81.
(2) Risk-weighted assets during exclusion
period. During the exclusion period,
including for the two calendar quarter-end

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regulatory report dates within the exclusion
period, a bank adopting the optional
provisions in paragraph (b) of this section
must calculate risk-weighted assets for its
contractual exposures to the VIEs referenced
in paragraph (b)(1) of this section 81 on the
implementation date and include this
calculated amount in risk-weighted assets.
Such contractual exposures may include
direct-credit substitutes, recourse obligations,
residual interests, liquidity facilities, and
loans.
(3) Inclusion of ALLL in Tier 2 capital for
the first and second quarters. During the
exclusion period, including for the two
calendar quarter-end regulatory report dates
within the exclusion period, a bank that
excludes VIE assets from risk-weighted assets
pursuant to paragraph (b)(1) of this section 81
may include in Tier 2 capital the full amount
of the ALLL calculated as of the
implementation date that is attributable to
the assets it excludes pursuant to paragraph
(b)(1) of this section 81 (inclusion amount).
The amount of ALLL includable in Tier 2
capital in accordance with this paragraph
shall not be subject to the limitations set
forth in section 13(a)(2) and (b) of this
Appendix.
(c) Phase-in period.
(1) Exclusion amount. For purposes of this
paragraph (c), exclusion amount is defined as
the amount of risk-weighted assets excluded
in paragraph (b)(1) of this section as of the
implementation date.
(2) Risk-weighted assets for the third and
fourth quarters. A bank that excludes assets
of consolidated VIEs from risk-weighted
assets pursuant to paragraph (b)(1) of this
section may, for the third and fourth quarters
after the implementation date (phase-in
period), including for the two calendar
quarter-end regulatory report dates within
those quarters, exclude from risk-weighted
assets 50 percent of the exclusion amount,
provided that the bank may not include in
risk-weighted assets pursuant to this
paragraph an amount less than the aggregate
risk-weighted assets calculated pursuant to
paragraph (b)(2) of this section 81.
(3) Inclusion of ALLL in Tier 2 capital for
the third and fourth quarters. A bank that
excludes assets of consolidated VIEs from
risk-weighted assets pursuant to paragraph
(c)(2) of this section may, for the phase-in
period, include in Tier 2 capital 50 percent
of the inclusion amount it included in Tier
2 capital during the exclusion period,
notwithstanding the limit on including ALLL
in Tier 2 capital in section 13(a)(2) and (b)
of this Appendix.
(d) Implicit recourse limitation.
Notwithstanding any other provision in this
section 81, assets held by a VIE to which the
bank has provided recourse through credit
enhancement beyond any contractual
obligation to support assets it has sold may
not be excluded from risk-weighted assets.

PART 225—BANK HOLDING
COMPANIES AND CHANGE IN BANK
CONTROL (REGULATION Y)
10. The authority citation for part 225
continues to read as follows:

■

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Fmt 4701

Sfmt 4700

Authority: 12 U.S.C. 1817(j)(13), 1818,
1828(o), 1831i, 1831p–1, 1843(c)(8), 1844(b),
1972(1), 3106, 3108, 3310, 3331–3351, 3907,
and 3909; 15 U.S.C. 1681s, 1681w, 6801 and
6805.

11. In appendix A to part 225,
A. Amend section I by adding a
paragraph immediately prior to the last
undesignated paragraph;
■ B. Amend paragraph iii. of section
II.A.1.c by removing the last sentence;
■ C. Remove paragraph b. of section
III.B.6 and redesignate paragraph c. of
section III.B.6 as paragraph b.;
■ D. Add new section IV.C.
The additions and revisions read as
follows:
■
■

Appendix A to Part 225—Capital
Adequacy Guidelines for Bank Holding
Companies: Risk-Based Measure
I. * * *
The Federal Reserve may determine that
the regulatory capital treatment for a banking
organization’s exposure or other relationship
to an entity not consolidated on the banking
organization’s balance sheet is not
commensurate with the actual risk
relationship of the banking organization to
the entity. In making this determination, the
Federal Reserve may require the banking
organization to treat the entity as if it were
consolidated onto the balance sheet of the
banking organization for risk-based capital
purposes and calculate the appropriate riskbased capital ratios accordingly, all as
specified by the Federal Reserve.

*

*

*

*

*

IV. * * *
C. Optional Transition Provisions Related to
the Implementation of Consolidation
Requirements under FAS 167
This section IV.C. provides optional
transition provisions for a banking
organization that is required for financial and
regulatory reporting purposes, as a result of
its implementation of Statement of Financial
Accounting Standards No. 167, Amendments
to FASB Interpretation No. 46(R) (FAS 167),
to consolidate certain variable interest
entities (VIEs) as defined under United States
generally accepted accounting principles
(GAAP). These transition provisions apply
through the end of the fourth quarter
following the date of a banking organization’s
implementation of FAS 167 (implementation
date).
1. Exclusion Period
a. Exclusion of risk-weighted assets for the
first and second quarters. For the first two
quarters after the implementation date
(exclusion period), including for the two
calendar quarter-end regulatory report dates
within those quarters, a banking organization
may exclude from risk-weighted assets:
i. Subject to the limitations in section
IV.C.3, assets held by a VIE, provided that the
following conditions are met:
(1) The VIE existed prior to the
implementation date,
(2) The banking organization did not
consolidate the VIE on its balance sheet for

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Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Rules and Regulations
calendar quarter-end regulatory report dates
prior to the implementation date,
(3) The banking organization must
consolidate the VIE on its balance sheet
beginning as of the implementation date as
a result of its implementation of FAS 167,
and
(4) The banking organization excludes all
assets held by VIEs described in paragraphs
C.1.a.i. (1) through (3) of this section
IV.C.1.a.i; and
ii. Subject to the limitations in section
IV.C.3, assets held by a VIE that is a
consolidated ABCP program, provided that
the following conditions are met:
(1) The banking organization is the sponsor
of the ABCP program,
(2) Prior to the implementation date, the
banking organization consolidated the VIE
onto its balance sheet under GAAP and
excluded the VIE’s assets from the banking
organization’s risk-weighted assets, and
(3) The banking organization chooses to
exclude all assets held by ABCP program
VIEs described in paragraphs (1) and (2) of
this section IV.C.1.a.ii.
b. Risk-weighted assets during exclusion
period. During the exclusion period,
including the two calendar quarter-end
regulatory report dates during the exclusion
period, a banking organization adopting the
optional provisions in section IV.C.1.a must
calculate risk-weighted assets for its
contractual exposures to the VIEs referenced
in section IV.C.1.a on the implementation
date and include this calculated amount in
its risk-weighted assets. Such contractual
exposures may include direct-credit
substitutes, recourse obligations, residual
interests, liquidity facilities, and loans.
c. Inclusion of allowance for loan and lease
losses in tier 2 capital for the first and second
quarters. During the exclusion period,
including for the two calendar quarter-end
regulatory report dates within the exclusion
period, a banking organization that excludes
VIE assets from risk-weighted assets pursuant
to section IV.C.1.a may include in tier 2
capital the full amount of the allowance for
loan and lease losses (ALLL) calculated as of
the implementation date that is attributable
to the assets it excludes pursuant to section
IV.C.1.a (inclusion amount). The amount of
ALLL includable in tier 2 capital in
accordance with this paragraph shall not be
subject to the limitations set forth in section
II.A.2.a of this Appendix.
2. Phase-In Period
a. Exclusion amount. For purposes of this
section IV.C., exclusion amount is defined as
the amount of risk-weighted assets excluded
in section IV.C.1.a as of the implementation
date.
b. Risk-weighted assets for the third and
fourth quarters. A banking organization that
excludes assets of consolidated VIEs from
risk-weighted assets pursuant to section
IV.C.1.a. may, for the third and fourth
quarters after the implementation date
(phase-in period), including for the two
calendar quarter-end regulatory report dates
within those quarters, exclude from riskweighted assets 50 percent of the exclusion
amount, provided that the banking
organization may not include in riskweighted assets pursuant to this paragraph an

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amount less than the aggregate risk-weighted
assets calculated pursuant to section IV.C.1.b.
c. Inclusion of ALLL in tier 2 capital for the
third and fourth quarters. A banking
organization that excludes assets of
consolidated VIEs from risk-weighted assets
pursuant to section IV.C.2.b. may, for the
phase-in period, include in tier 2 capital 50
percent of the inclusion amount it included
in tier 2 capital during the exclusion period,
notwithstanding the limit on including ALLL
in tier 2 capital in section II.A.2.a. of this
Appendix.
3. Implicit recourse limitation.
Notwithstanding any other provision in this
section IV.C., assets held by a VIE to which
the banking organization has provided
recourse through credit enhancement beyond
any contractual obligation to support assets
it has sold may not be excluded from riskweighted assets.

12. In appendix G to part 225,
A. In section 1(c), redesignate
paragraph (3) as paragraph (4), and add
a new paragraph (3);
■ B. Remove section 42(l) and
redesignating section 42(m) as section
42(l);
■ C. Add a new part IX and section 81
at the end of appendix G.
The added text will read as follows:
■
■

Appendix G to Part 225—Capital
Adequacy Guidelines for Bank Holding
Companies: Internal-Ratings-Based and
Advanced Measurement Approaches
*

*

*

*

*

*

*

*

1. * * *
(c) * * *

*

*

(3) Regulatory capital treatment of
unconsolidated entities. The Federal Reserve
may determine that the regulatory capital
treatment for a bank holding company’s
exposure or other relationship to an entity
not consolidated on the bank holding
company’s balance sheet is not
commensurate with the actual risk
relationship of the bank holding company to
the entity. In making this determination, the
Federal Reserve may require the bank
holding company to treat the entity as if it
were consolidated onto the balance sheet of
the bank holding company for risk-based
capital purposes and calculate the
appropriate risk-based capital ratios
accordingly, all as specified by the Federal
Reserve.

*

*

*

*

*

Part IX—Transition Provisions
Section 81—Optional Transition Provisions
Related to the Implementation of,
Consolidation Requirements Under FAS 167
(a) Scope, applicability, and purpose. This
section 81 provides optional transition
provisions for a bank holding company that
is required for financial and regulatory
reporting purposes, as a result of its
implementation of Statement of Financial
Accounting Standards No. 167, Amendments
to FASB Interpretation No. 46(R) (FAS 167),
to consolidate certain variable interest

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4649

entities (VIEs) as defined under GAAP. These
transition provisions apply through the end
of the fourth quarter following the date of a
bank holding company’s implementation of
FAS 167 (implementation date).
(b) Exclusion period.
(1) Exclusion of risk-weighted assets for the
first and second quarters. For the first two
quarters after the implementation date
(exclusion period), including for the two
calendar quarter-end regulatory report dates
within those quarters, a bank holding
company may exclude from risk-weighted
assets:
(i) Subject to the limitations in paragraph
(d) of this section 81, assets held by a VIE,
provided that the following conditions are
met:
(A) The VIE existed prior to the
implementation date,
(B) The bank holding company did not
consolidate the VIE on its balance sheet for
calendar quarter-end regulatory report dates
prior to the implementation date,
(C) The bank holding company must
consolidate the VIE on its balance sheet
beginning as of the implementation date as
a result of its implementation of FAS 167,
and
(D) The bank holding company excludes
all assets held by VIEs described in
paragraphs (b)(1)(i)(A) through (C) of this
section 81; and
(ii) Subject to the limitations in paragraph
(d) of this section 81, assets held by a VIE
that is a consolidated ABCP program,
provided that the following conditions are
met:
(A) The bank holding company is the
sponsor of the ABCP program,
(B) Prior to the implementation date, the
bank holding company consolidated the VIE
onto its balance sheet under GAAP and
excluded the VIE’s assets from the bank
holding company’s risk-weighted assets, and
(C) The bank holding company chooses to
exclude all assets held by ABCP program
VIEs described in paragraphs (b)(1)(ii)(A) and
(B) of this section 81.
(2) Risk-weighted assets during exclusion
period. During the exclusion period,
including for the two calendar quarter-end
regulatory report dates within the exclusion
period, a bank holding company adopting the
optional provisions in paragraph (b) of this
section must calculate risk-weighted assets
for its contractual exposures to the VIEs
referenced in paragraph (b)(1) of this section
81 on the implementation date and include
this calculated amount in risk-weighted
assets. Such contractual exposures may
include direct-credit substitutes, recourse
obligations, residual interests, liquidity
facilities, and loans.
(3) Inclusion of ALLL in Tier 2 capital for
the first and second quarters. During the
exclusion period, including for the two
calendar quarter-end regulatory report dates
within the exclusion period, a bank holding
company that excludes VIE assets from riskweighted assets pursuant to paragraph (b)(1)
of this section 81 may include in Tier 2
capital the full amount of the ALLL
calculated as of the implementation date that
is attributable to the assets it excludes
pursuant to paragraph (b)(1) of this section 81

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(inclusion amount). The amount of ALLL
includable in Tier 2 capital in accordance
with this paragraph shall not be subject to the
limitations set forth in section 13(a)(2) and
(b) of this Appendix.
(c) Phase-in period.
(1) Exclusion amount. For purposes of this
paragraph (c), exclusion amount is defined as
the amount of risk-weighted assets excluded
in paragraph (b)(1) of this section as of the
implementation date.
(2) Risk-weighted assets for the third and
fourth quarters. A bank holding company
that excludes assets of consolidated VIEs
from risk-weighted assets pursuant to
paragraph (b)(1) of this section may, for the
third and fourth quarters after the
implementation date (phase-in period),
including for the two calendar quarter-end
regulatory report dates within those quarters,
exclude from risk-weighted assets 50 percent
of the exclusion amount, provided that the
bank holding company may not include in
risk-weighted assets pursuant to this
paragraph an amount less than the aggregate
risk-weighted assets calculated pursuant to
paragraph (b)(2) of this section 81.
(3) Inclusion of ALLL in Tier 2 capital for
the third and fourth quarters. A bank holding
company that excludes assets of consolidated
VIEs from risk-weighted assets pursuant to
paragraph (c)(2) of this section may, for the
phase-in period, include in Tier 2 capital 50
percent of the inclusion amount it included
in Tier 2 capital during the exclusion period,
notwithstanding the limit on including ALLL
in Tier 2 capital in section 13(a)(2) and (b)
of this Appendix.
(d) Implicit recourse limitation.
Notwithstanding any other provision in this
section 81, assets held by a VIE to which the
bank holding company has provided recourse
through credit enhancement beyond any
contractual obligation to support assets it has
sold may not be excluded from risk-weighted
assets.

Federal Deposit Insurance Corporation
12 CFR Chapter III
Authority for Issuance
For the reasons stated in the common
preamble, the Federal Deposit Insurance
Corporation amends Part 325 of Chapter
III of Title 12, Code of the Federal
Regulations as follows:

■

PART 325—CAPITAL MAINTENANCE
13. The authority citation for part 325
continues to read as follows:

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■

Authority: 12 U.S.C. 1815(a), 1815(b),
1816, 1818(a), 1818(b), 1818(c), 1818(t),
1819(Tenth), 1828(c), 1828(d), 1828(i),
1828(n), 1828(o), 1831o, 1835, 3907, 3909,
4808; Pub. L. 102–233, 105 Stat. 1761, 1789,
1790, (12 U.S.C. 1831n note); Pub. L. 102–
242, 105 Stat. 2236, as amended by Pub. L.
103–325, 108 Stat. 2160, 2233 (12 U.S.C.
1828 note); Pub. L. 102–242, 105 Stat. 2236,
2386, as amended by Pub. L. 102–550, 106
Stat. 3672, 4089 (12 U.S.C. 1828 note).

14. In Appendix A to part 325, revise
section I.A.1.iii.(d) to read as follows:

■

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17:46 Jan 27, 2010

Jkt 220001

Appendix A to Part 325—Statement of
Policy on Risk Based Capital
*

*

*

*

*

I. * * *
A. * * *
1. * * *
iii. * * *
(d) Minority interests in small business
investment companies, investment funds that
hold nonfinancial equity investments (as
defined in section II.B.(6)(ii) of this appendix
A), and subsidiaries that are engaged in nonfinancial activities are not included in the
bank’s Tier 1 or total capital base if the
bank’s interest in the company or fund is
held under one of the legal authorities listed
in section II.B.(6)(ii) of this appendix A.

15. Further amend Appendix A to part
325 in section II.A. by adding new
paragraphs 4. and 5. as follows:

■

Appendix A to Part 325—Statement of
Policy on Risk Based Capital
*

*

*

*

*

II. * * *
A. * * *
4. The Director of the Division of
Supervision and Consumer Protection (DSC)
may, on a case-by-case basis, determine that
the regulatory capital treatment for an
exposure or other relationship to an entity
that is not subject to consolidation on the
balance sheet is not commensurate with the
risk of the exposure and the relationship of
the bank to the entity. In making this
determination, the Director of DSC may
require the bank to treat the entity as if it
were consolidated on the balance sheet of the
bank for risk-based capital purposes and
calculate the appropriate risk-based capital
ratios accordingly.
5. Optional Transition Provisions Related to
the Implementation of Consolidation
Requirements Under FAS 167
Section II.A.5 of this appendix provides
optional transition provisions for a State
nonmember bank that is required for
financial and regulatory reporting purposes,
as a result of its implementation of Statement
of Financial Accounting Standards No. 167,
Amendments to FASB Interpretation No.
46(R) (FAS 167), to consolidate certain
variable interest entities (VIEs) as defined
under United States generally accepted
accounting principles (GAAP). These
transition provisions apply through the end
of the fourth quarter following the date of a
bank’s implementation of FAS 167
(implementation date).
i. Exclusion period.
(a) Exclusion of risk-weighted assets for the
first and second quarters. For the first two
quarters after the implementation date
(exclusion period), including for the two
calendar quarter-end regulatory report dates
within those quarters, a bank may exclude
from risk-weighted assets:
(1) Subject to the limitations in paragraph
iii. of this section II.A.5, assets held by a VIE,
provided that the following conditions are
met:

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(i) The VIE existed prior to the
implementation date,
(ii) The bank did not consolidate the VIE
on its balance sheet for calendar quarter-end
regulatory report dates prior to the
implementation date,
(iii) The bank must consolidate the VIE on
its balance sheet beginning as of the
implementation date as a result of its
implementation of FAS 167, and
(iv) The bank excludes all assets held by
VIEs described in paragraphs i.(a)(1)(i)
through (iii) of this section II.A.5; and
(2) Subject to the limitations in paragraph
iii. of this section II.A.5, assets held by a VIE
that is a consolidated asset-backed
commercial paper (ABCP) program, provided
that the following conditions are met:
(i) The bank is the sponsor of the ABCP
program,
(ii) Prior to the implementation date, the
bank consolidated the VIE onto its balance
sheet under GAAP and excluded the VIE’s
assets from the bank’s risk-weighted assets,
and
(iii) The bank chooses to exclude all assets
held by ABCP program VIEs described in
paragraphs i.(a)(2)(i) and (ii) of this section
II.A.5.
(b) Risk-weighted assets during exclusion
period. During the exclusion period,
including the two calendar quarter-end
regulatory report dates within the exclusion
period, a bank adopting the optional
provisions of this paragraph i. of this section
II.A.5 must calculate risk-weighted assets for
its contractual exposures to the VIEs
referenced in paragraph i.(a) of this section
II.A.5 on the implementation date and
include this calculated amount in its riskweighted assets. Such contractual exposures
may include direct-credit substitutes,
recourse obligations, residual interests,
liquidity facilities, and loans.
(c) Inclusion of ALLL in Tier 2 capital for
the first and second quarters. During the
exclusion period, including for the two
calendar quarter-end regulatory report dates
within the exclusion period, a bank that
excludes VIE assets from risk-weighted assets
pursuant to paragraph i.(a) of this section
II.A.5 may include in Tier 2 capital the full
amount of the allowance for loan and lease
losses (ALLL) calculated as of the
implementation date that is attributable to
the assets it excludes pursuant to paragraph
i.(a) of this section II.A.5 (inclusion amount).
The amount of ALLL includable in Tier 2
capital in accordance with this paragraph
shall not be subject to the limitations set
forth in paragraph i. of section I.A.2.
ii. Phase-in period.
(a) Exclusion amount. For purposes of this
paragraph ii. of this section II.A.5, exclusion
amount is defined as the amount of riskweighted assets excluded in paragraph i.(a) of
this section II.A.5 as of the implementation
date.
(b) Risk-weighted assets for the third and
fourth quarters. A bank that excludes assets
of consolidated VIEs from risk-weighted
assets pursuant to paragraph i.(a) of this
section II.A.5 may, for the third and fourth
quarters after the implementation date
(phase-in period), including for the two
calendar quarter-end regulatory report dates

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Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Rules and Regulations
within those quarters, exclude from riskweighted assets 50 percent of the exclusion
amount, provided that the bank may not
include in risk-weighted assets pursuant to
this paragraph an amount less than the
aggregate risk-weighted assets calculated
pursuant to paragraph i.(b) of this section
II.A.5.
(c) Inclusion of ALLL in Tier 2 capital for
the third and fourth quarters. A bank that
excludes assets of consolidated VIEs from
risk-weighted assets pursuant to paragraph
ii.(b) of this section II.A.5 may, for the phasein period, include in Tier 2 capital 50 percent
of the inclusion amount it included in Tier
2 capital during the exclusion period,
notwithstanding the limit on including ALLL
in Tier 2 capital in paragraph i. of section
I.A.2.
iii. Implicit recourse limitation.
Notwithstanding any other provision in this
section II.A.5, assets held by a VIE to which
the bank has provided recourse through
credit enhancement beyond any contractual
obligation to support assets it has sold may
not be excluded from risk-weighted assets.

16. Further amend Appendix A to part
325 by removing section II.B.6.b. and
redesignating section II.B.6.c. as section
II.B.6.b.
■ 17. In Appendix D to part 325, amend
the Table of Contents by adding a new
Part IX and Section 81 as follows:
■

Appendix D to Part 325—Capital
Adequacy Guidelines for Banks:
Internal-Ratings-Based and Advanced
Measurement Approaches
Part I—General Provisions

*

*

*

*

*

Part IX—Transition Provisions
Section 81—Optional Transition Provisions
Related to the Implementation of
Consolidation Requirements Under FAS 167

18. Further amend Appendix D to part
325 in section 1(c) by redesignating
paragraph (3) as paragraph (4) and
adding new paragraph (3) as follows:

■

Appendix D to Part 325—Capital
Adequacy Guidelines for Banks:
Internal-Ratings-Based and Advanced
Measurement Approaches

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Part I. * * *
Section 1. * * *
(c) * * *
(3) The FDIC may, on a case-by-case basis,
determine that the regulatory capital
treatment for an exposure or other
relationship to an entity that is not subject to
consolidation on the balance sheet is not
commensurate with the risk of the exposure
and the relationship of the bank to the entity.
In making this determination, the FDIC may
require the bank to treat the entity as if it
were consolidated on the balance sheet of the
bank for risk-based capital purposes and
calculate the appropriate risk-based capital
ratios accordingly.

*

*

*

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*

*

17:46 Jan 27, 2010

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19. Further amend Appendix D to part
325 by removing section 42(l) and
redesignating section 42(m) as section
42(l).
■ 20. Further amend Appendix D to part
325 by adding a new part IX and section
81 to read as follows:
■

Appendix D to Part 325—Capital
Adequacy Guidelines for Banks:
Internal-Ratings-Based and Advanced
Measurement Approaches
*

*

*

*

*

Part IX—Transition Provisions
Section 81—Optional Transition Provisions
Related to the Implementation of
Consolidation Requirements Under FAS 167
(a) Scope, applicability, and purpose. This
section 81 provides optional transition
provisions for a State nonmember bank that
is required for financial and regulatory
reporting purposes, as a result of its
implementation of Statement of Financial
Accounting Standards No. 167, Amendments
to FASB Interpretation No. 46(R) (FAS 167),
to consolidate certain variable interest
entities (VIEs) as defined under GAAP. These
transition provisions apply through the end
of the fourth quarter following the date of a
bank’s implementation of FAS 167
(implementation date).
(b) Exclusion period.
(1) Exclusion of risk-weighted assets for the
first and second quarters. For the first two
quarters after the implementation date
(exclusion period), including for the two
calendar quarter-end regulatory report dates
within those quarters, a bank may exclude
from risk-weighted assets:
(i) Subject to the limitations in paragraph
(d) of this section 81, assets held by a VIE,
provided that the following conditions are
met:
(A) The VIE existed prior to the
implementation date,
(B) The bank did not consolidate the VIE
on its balance sheet for calendar quarter-end
regulatory report dates prior to the
implementation date,
(C) The bank must consolidate the VIE on
its balance sheet beginning as of the
implementation date as a result of its
implementation of FAS 167, and
(D) The bank excludes all assets held by
VIEs described in paragraphs (b)(1)(i)(A)
through (C) of this section 81; and
(ii) Subject to the limitations in paragraph
(d) of this section 81, assets held by a VIE
that is a consolidated ABCP program,
provided that the following conditions are
met:
(A) The bank is the sponsor of the ABCP
program,
(B) Prior to the implementation date, the
bank consolidated the VIE onto its balance
sheet under GAAP and excluded the VIE’s
assets from the bank’s risk-weighted assets,
and
(C) The bank chooses to exclude all assets
held by ABCP program VIEs described in
paragraphs (b)(1)(ii)(A) and (B) of this section
81.
(2) Risk-weighted assets during exclusion
period. During the exclusion period,

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4651

including for the two calendar quarter-end
regulatory report dates within the exclusion
period, a bank adopting the optional
provisions in paragraph (b) of this section
must calculate risk-weighted assets for its
contractual exposures to the VIEs referenced
in paragraph (b)(1) of this section 81 on the
implementation date and include this
calculated amount in risk-weighted assets.
Such contractual exposures may include
direct-credit substitutes, recourse obligations,
residual interests, liquidity facilities, and
loans.
(3) Inclusion of ALLL in Tier 2 capital for
the first and second quarters. During the
exclusion period, including for the two
calendar quarter-end regulatory report dates
within the exclusion period, a bank that
excludes VIE assets from risk-weighted assets
pursuant to paragraph (b)(1) of this section 81
may include in Tier 2 capital the full amount
of the ALLL calculated as of the
implementation date that is attributable to
the assets it excludes pursuant to paragraph
(b)(1) of this section 81 (inclusion amount).
The amount of ALLL includable in Tier 2
capital in accordance with this paragraph
shall not be subject to the limitations set
forth in section 13(a)(2) and (b) of this
Appendix.
(c) Phase-in period.
(1) Exclusion amount. For purposes of this
paragraph (c), exclusion amount is defined as
the amount of risk-weighted assets excluded
in paragraph (b)(1) of this section as of the
implementation date.
(2) Risk-weighted assets for the third and
fourth quarters. A bank that excludes assets
of consolidated VIEs from risk-weighted
assets pursuant to paragraph (b)(1) of this
section may, for the third and fourth quarters
after the implementation date (phase-in
period), including for the two calendar
quarter-end regulatory report dates within
those quarters, exclude from risk-weighted
assets 50 percent of the exclusion amount,
provided that the bank may not include in
risk-weighted assets pursuant to this
paragraph an amount less than the aggregate
risk-weighted assets calculated pursuant to
paragraph (b)(2) of this section 81.
(3) Inclusion of ALLL in Tier 2 capital for
the third and fourth quarters. A bank that
excludes assets of consolidated VIEs from
risk-weighted assets pursuant to paragraph
(c)(2) of this section may, for the phase-in
period, include in Tier 2 capital 50 percent
of the inclusion amount it included in Tier
2 capital during the exclusion period,
notwithstanding the limit on including ALLL
in Tier 2 capital in section 13(a)(2) and (b)
of this Appendix.
(d) Implicit recourse limitation.
Notwithstanding any other provision in this
section 81, assets held by a VIE to which the
bank has provided recourse through credit
enhancement beyond any contractual
obligation to support assets it has sold may
not be excluded from risk-weighted assets.

Department of the Treasury
Office of Thrift Supervision
12 CFR Chapter V
For reasons set forth in the common
preamble, the Office of Thrift

■

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Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Rules and Regulations

Supervision amends part 567 of Chapter
V of title 12 of the Code of Federal
Regulations as follows:
PART 567—CAPITAL
21. The authority citation for part 567
continues to read as follows:

■

Authority: 12 U.S.C. 1462, 1462a, 1463,
1464, 1467a, 1828 (note).

22. Section 567.0 is amended by
adding paragraph (c) to read as follows:

■

§ 567.0

Scope.

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*

*
*
*
*
(c) Optional transition provisions
related to the implementation of
consolidation requirements under FAS
167—(1) Scope, applicability, and
purpose. The section provides optional
transition provisions for a savings
association that is required for financial
and regulatory reporting purposes, as a
result of its implementation of
Statement of Financial Accounting
Standards No. 167, Amendments to
FASB Interpretation No. 46(R) (referred
to in this section as FAS 167), to
consolidate certain variable interest
entities (VIEs) as defined under United
States generally accepted accounting
principles (GAAP). These transition
provisions apply through the end of the
fourth quarter following the date of a
savings association’s implementation of
FAS 167 (implementation date).
(2) Exclusion period—(i) Exclusion of
risk-weighted assets for first and second
quarters. For the first two quarters, after
the implementation date (exclusion
period), including for the two calendar
quarter-end regulatory report dates
within those quarters, a savings
association may exclude from riskweighted assets:
(A) Subject to the limitations in
paragraph (c)(4) of this section, assets
held by a VIE, provided that the
following conditions are met:
(1) The VIE existed prior to the
implementation date;
(2) The savings association did not
consolidate the VIE on its balance sheet
for calendar quarter-end regulatory
report dates prior to the implementation
date;
(3) The savings association must
consolidate the VIE on its balance sheet
beginning as of the implementation date
as a result of its implementation of FAS
167; and
(4) The savings association excludes
all assets held by VIEs described in
paragraphs (c)(2)(i)(A)(1) through (3) of
this section.
(B) Subject to the limitations in
paragraph (c)(4) of this section, assets
held by a VIE that is a consolidated
asset-backed commercial paper (ABCP)

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17:46 Jan 27, 2010

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program, provided that the following
conditions are met:
(1) The savings association is the
sponsor of the ABCP program,
(2) Prior to the implementation date,
the savings association consolidated the
VIE onto its balance sheet under GAAP
and excluded the VIE’s assets from the
savings association’s risk-weighted
assets; and
(3) The savings association chooses to
exclude all assets held by ABCP
program VIEs described in paragraphs
(c)(2)(i)(B)(i) and (ii) of this section.
(ii) Risk-weighted assets during
exclusion period. During the exclusion
period, including the two calendar
quarter-end regulatory report dates
within the exclusion period, a savings
association adopting the optional
provisions of paragraph (c)(2) of this
section must calculate risk-weighted
assets for its contractual exposures to
the VIEs referenced in paragraph
(c)(2)(i) on the implementation date and
include this calculated amount in its
risk-weighted assets. Such contractual
exposures may include direct-credit
substitutes, recourse obligations,
residual interests, liquidity facilities,
and loans.
(iii) Inclusion of Allowance for Loan
and Lease Losses (ALLL) in tier 2 capital
for the first and second quarters. During
the exclusion period, including for the
two calendar quarter-end regulatory
report dates within the exclusion
period, a savings association that
excludes VIE assets from risk-weighted
assets pursuant to paragraph (c)(2)(i) of
this section may include in tier 2 capital
the full amount of the allowance for
loan and lease losses (ALLL) calculated
as of the implementation date that is
attributable to the assets it excludes
pursuant to paragraph (c)(2)(i) of this
section (inclusion amount). The amount
of ALLL includable in tier 2 capital in
accordance with this paragraph shall
not be subject to the limitations set forth
at § 567.5(b)(4).
(3) Phase-in period—(i) Exclusion
amount. For purposes of this paragraph,
exclusion amount is defined as the
amount of risk-weighted assets excluded
in paragraph (c)(2)(i) of this section as
of the implementation date.
(ii) Risk-weighted assets for the third
and fourth quarters. A savings
association that excludes assets of
consolidated VIEs from risk-weighted
assets pursuant to paragraph (c)(2)(i) of
this section may, for the third and
fourth quarters, after the
implementation date (phase-in period),
including for the two calendar quarterend regulatory report dates within those
quarters exclude from risk-weighted
assets 50 percent of the exclusion

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amount, provided that the savings
association may not include in riskweighted assets pursuant to this
paragraph an amount less than the
aggregate risk-weighted assets
calculated pursuant to paragraph
(b)(2)(ii) of this section.
(iii) Inclusion of ALLL in Tier 2
capital for the third and fourth quarters.
A savings association that excludes
assets of consolidated VIEs from riskweighted assets pursuant to paragraph
(c)(3)(ii) of this section may, for the
phase-in period, include in tier 2 capital
50 percent of the inclusion amount it
included in tier 2 capital during the
exclusion period, notwithstanding the
limit on including ALLL in tier 2 capital
in § 567.5(b)(4).
(4) Implicit recourse limitation.
Notwithstanding any other provision in
§ 567.0(c), assets held by a VIE to which
a savings association has provided
recourse through credit enhancement
beyond any contractual obligation to
support assets it has sold may not be
excluded from risk-weighted assets.
■ 23. Section 567.5 (a)(1)(iii) is revised
to read as follows:
§ 567.5

Components of capital.

*

*
*
*
*
(a) * * *
(1) * * *
(iii) Minority interests in the equity
accounts of the subsidiaries that are
fully consolidated.
*
*
*
*
*
■ 24. Section 567.6 is amended by
revising paragraph (a)(3) to read as
follows:
§ 567.6 Risk-based capital credit riskweight categories.

*

*
*
*
*
(a) * * *
(3) If a savings association has
multiple overlapping exposures (such as
a program-wide credit enhancement and
a liquidity facility) to an ABCP program
that is not consolidated for risk-based
capital purposes, the savings association
is not required to hold duplicative riskbased capital under this part against the
overlapping position. Instead, the
savings association should apply to the
overlapping position the applicable riskbased capital treatment that results in
the highest capital charge.
*
*
*
*
*
■ 25. Section 567.11 is amended by
redesignating paragraph (c)(3) as
paragraph (c)(4), and adding new
paragraphs (c)(3) and (d) to read as
follows:
§ 567.11

*

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Reservation of authority.

*

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*

Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Rules and Regulations
(c) * * *
(3) OTS may find that the capital
treatment for an exposure to a
transaction not subject to consolidation
on the savings association’s balance
sheet does not appropriately reflect the
risks imposed on the savings
association. Accordingly, OTS may
require the savings association to treat
the transaction as if it were consolidated
on the savings association’s balance
sheet. OTS will look to the substance of
and risk associated with the transaction
as well as other relevant factors in
determining whether to require such
treatment and in calculating risk based
capital as OTS deems appropriate.
*
*
*
*
*
(d) In making a determination under
this paragraph (c) of this section, the
OTS will notify the savings association
of the determination and solicit a
response from the savings association.
After review of the response by the
savings association, the OTS shall issue
a final supervisory decision regarding
the determination made under
paragraph (c) of this section.
■ 26. In Appendix C to part 567, amend
the Table of Contents by adding a new
Part IX and Section 81 as follows:
Appendix C to Part 567—Risk-Based
Capital Requirements—InternalRatings-Based and Advanced
Measurement Approaches
*

*

*

*

*

Part IX—Transition Provisions
Section 81—Optional Transition Provisions
Related to the Implementation of
Consolidation Requirements Under FAS 167

27. Further amend Appendix C to part
567 by redesignating paragraph (c)(3) as
paragraph (c)(4) and adding a new
paragraph (c)(3) to Part 1, Section 1 as
follows:

■

Appendix C to Part 567—Risk-Based
Capital Requirements—InternalRatings-Based and Advanced
Measurement Approaches

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*

*

*

*

*

(c) * * *
(3) Regulatory capital treatment of
unconsolidated entities. OTS may find that
the capital treatment for an exposure to a
transaction not subject to consolidation on
the savings association’s balance sheet does
not appropriately reflect the risks imposed on
the savings association. Accordingly, OTS
may require the savings association to treat
the transaction as if it were consolidated on
the savings association’s balance sheet. OTS
will look to the substance of and risk
associated with the transaction as well as
other relevant factors in determining whether
to require such treatment and in calculating
risk-based capital as OTS deems appropriate.

*

*

*

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*

*

17:46 Jan 27, 2010

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28. Further amend appendix C to part
567 by removing section 42(l) and
redesignating section 42(m) as section
42(l).
■ 29. Further amend Appendix C to part
567 by adding a new part IX and section
81 to read as follows:
■

Appendix C to Part 567—Risk-Based
Capital Requirements: Internal-RatingsBased and Advanced Measurement
Approaches
*

*

*

*

*

Part IX—Transition Provisions
Section 81—Optional Transition Provisions
Related to the Implementation of
Consolidation Requirements Under FAS 167
(a) Scope, applicability, and purpose. This
section 81 provides optional transition
provisions for a savings association that is
required for financial and regulatory
reporting purposes, as a result of its
implementation of Statement of Financial
Accounting Standards No. 167, Amendments
to FASB Interpretation No. 46(R) (FAS 167),
to consolidate certain variable interest
entities (VIEs) as defined under GAAP. These
transition provisions apply through the end
of the fourth quarter following the date of a
savings association’s implementation of FAS
167 (implementation date).
(b) Exclusion period.
(1) Exclusion of risk-weighted assets for the
first and second quarters. For the first two
quarters after the implementation date
(exclusion period), including for the two
calendar quarter-end regulatory report dates
within those quarters, a savings association
may exclude from risk-weighted assets:
(i) Subject to the limitations in paragraph
(d) of section 81, assets held by a VIE,
provided that the following conditions are
met:
(A) The VIE existed prior to the
implementation date,
(B) The savings association did not
consolidate the VIE on its balance sheet for
calendar quarter-end regulatory report dates
prior to the implementation date,
(C) The savings association must
consolidate the VIE on its balance sheet
beginning as of the implementation date as
a result of its implementation of FAS 167,
and
(D) The savings association excludes all
assets held by VIEs described in paragraphs
(b)(1)(i)(A) through (C) of this section 81; and
(ii) Subject to the limitations in paragraph
(d) of this section 81, assets held by a VIE
that is a consolidated ABCP program,
provided that the following conditions are
met:
(A) The savings association is the sponsor
of the ABCP program,
(B) Prior to the implementation date, the
savings association consolidated the VIE onto
its balance sheet under GAAP and excluded
the VIE’s assets from the savings association’s
risk-weighted assets, and
(C) The savings association chooses to
exclude all assets held by ABCP program
VIEs described in paragraphs (b)(1)(ii)(A) and
(B) of this section 81.

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4653

(2) Risk-weighted assets during exclusion
period. During the exclusion period,
including for the two calendar quarter-end
regulatory report dates within the exclusion
period, a savings association adopting the
optional provisions in paragraph (b) of this
section must calculate risk-weighted assets
for its contractual exposures to the VIEs
referenced in paragraph (b)(1) of this section
81 on the implementation date and include
this calculated amount in risk-weighted
assets. Such contractual exposures may
include direct-credit substitutes, recourse
obligations, residual interests, liquidity
facilities, and loans.
(3) Inclusion of ALLL in tier 2 capital for
the first and second quarters. During the
exclusion period, including for the two
calendar quarter-end regulatory report dates
within the exclusion period, a savings
association that excludes VIE assets from
risk-weighted assets pursuant to paragraph
(b)(1) of this section 81 may include in tier
2 capital the full amount of the ALLL
calculated as of the implementation date that
is attributable to the assets it excludes
pursuant to paragraph (b)(1) of this section 81
(inclusion amount). The amount of ALLL
includable in tier 2 capital in accordance
with this paragraph shall not be subject to the
limitations set forth in section 13(A)(2) and
13(b) of this Appendix.
(c) Phase-in period.
(1) Exclusion amount. For purposes of this
paragraph (c), exclusion amount is defined as
the amount of risk-weighted assets excluded
in paragraph (b)(1) of this section as of the
implementation date.
(2) Risk-weighted assets for the third and
fourth quarters. A savings association that
excludes assets of consolidated VIEs from
risk-weighted assets pursuant to paragraph
(b)(1) of this section may, for the third and
fourth quarters after the implementation date
(phase-in period), including for the two
calendar quarter-end regulatory report dates
within those quarters, exclude from riskweighted assets 50 percent of the exclusion
amount, provided that the savings
association may not include in risk-weighted
assets pursuant to this paragraph an amount
less than the aggregate risk-weighted assets
calculated pursuant to paragraph (b)(2) of
this section 81.
(3) Inclusion of ALLL in tier 2 capital for
the third and fourth quarters. A savings
association that excludes assets of
consolidated VIEs from risk-weighted assets
pursuant to paragraph (c)(2) of this section
may, for the phase-in period, include in tier
2 capital 50 percent of the inclusion amount
it included in tier 2 capital, during the
exclusion period, notwithstanding the limit
on including ALLL in tier 2 capital in section
13(a)(2) and 13(b) of this Appendix.
(d) Implicit recourse limitation.
Notwithstanding any other provision in this
section 81, assets held by a VIE to which the
savings association has provided recourse
through credit enhancement beyond any
contractual obligation to support assets it has
sold may not be excluded from risk-weighted
assets.

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Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Rules and Regulations

Dated: January 7, 2010.
John C. Dugan,
Comptroller of Currency.

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By Order of the Board of Governors of the
Federal Reserve System.
Jennifer J. Johnson,
Secretary of the Board.
Dated at Washington, DC, at this 17th day
of December 2009.

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By order of the Board of Directors.
Robert E. Feldman,
Executive Secretary.
Federal Deposit Insurance Corporation.
Dated: December 18, 2009.

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By the Office of Thrift Supervision.
John E. Bowman,
Acting Director.
[FR Doc. 2010–825 Filed 1–27–10; 8:45 am]
BILLING CODE 6720–01–P; 6210–01–P; 6714–01–P;
6720–01–P

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