WASHINGTON — House conferees on Thursday were expected to offer a proposal that would phase in tough new capital requirements for bank holding companies.
Under the Senate regulatory reform bill, trust preferred securities would no longer count as Tier 1 capital for all bank holding companies - a change that would be effective immediately after the bill is signed into law.
House conferees were expected to recommend a transition period that would differ for large and small banks. The House proposal would exempt all holding companies with less than $500 million of assets, and grandfather existing trust-preferreds prior to May 19 for firms with less than $15 billion of assets.
Larger holding companies, however, would face a 3-year phase in of the requirement beginning on Jan. 1, 2013.
Regulators would also be prevented from amending capital adequacy guidelines, including the capital treatment of debt or equity.
Trade groups, including the American Bankers Association, have warned conferees to avoid changing capital rules, arguing that immediate adoption of the provision would lead many banks to be considered undercapitalized.
But Sen. Susan Collins, R-Maine, has continued to defend her provision, which she added at the behest of the Federal Deposit Insurance Corp.
Under conference rules, the Senate conferees can accept, reject or make a counteroffer to the House proposal. Some sources indicated that the Senate may push to grandfather trust-preferreds only for firms with less than $10 billion, instead of the $15 billion in the House proposal.