WASHINGTON -- The four bank and thrift agencies have jointly released a proposal to revise capital rules for assets sold with recourse.
The plan, which was previously approved by both the Federal Reserve and the Federal Deposit Insurance Corp., would allow lenders to maintain lower amounts of capital against low-level recourse transactions.
It would also require higher amounts of capital to be maintained against certain direct credit substitutes.
Gauging Risks Better
As part of the proposal, the agencies released an advance notice of proposed rulemaking to use credit ratings to match the risk-based capital assessments more closely to an institution's relative risk of loss in certain asset securitizations.
Comments on the proposal are due by July 25.
Also this week, the Fed and the Comptroller's office requested public comment on a plan to amend risk-based capital guidelines to recognize the risk-reducing benefits of netting arrangements.
Aim Is to Reduce Exposure
Under the plan, which the Fed approved in March, lenders would be permitted to net, for risk-based capital purposes, the current exposures of interest and exchange rate contracts subject to qualifying bilateral netting contracts.
The initiative, which is based on a proposed revision to the Basel Accord, is expected to reduce counterparty credit exposure related to swaps and other financial instruments.
Comments on the netting plan are due on June 20.