Joint Report to Congressional Committees: Differences in Accounting and Capital Standards Among the Federal Banking Agencies as of September 30, 2024, 95786-95788 [2024-28227]
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95786
Federal Register / Vol. 89, No. 232 / Tuesday, December 3, 2024 / Notices
For
additional information about the
information collection, contact Cathy
Williams at (202) 418–2918.
SUPPLEMENTARY INFORMATION:
OMB Control Number: 3060–0748.
Title: Section 64.104, 64.1509,
64.1510 Pay-Per-Call and Other
Information Services.
Form Number: N/A.
Type of Review: Extension of a
currently approved collection.
Respondents: Business or other forprofit entities.
Number of Respondents and
Responses: 5,125 respondents; 5,175
responses.
Estimated Time per Response: 2 to
260 hours.
Frequency of Response: Annual and
on occasion reporting and
recordkeeping requirements; Third
party disclosure requirement.
Obligation to Respond: Required to
obtain or retain benefits. The statutory
authority(s) for the information
collection is found at 47 U.S.C.
228(c)(7)–(10); Public Law 192–556, 106
Stat. 4181 (1992), codified at 47 U.S.C.
228 (The Telephone Disclosure and
Dispute Resolution Act of 1992).
Total Annual Burden: 47,750 hours.
Total Annual Cost: None.
Needs and Uses: Regulations at 47
CFR 64.1504 of the Commission’s rules
incorporate the requirements of sections
228(c)(7)–(10) of the Communications
Act restricting the manner in which tollfree numbers may be used to charge
telephone subscribers for information
services. Common carriers may not
charge a calling party for information
conveyed on a toll-free number call,
unless the calling party: (1) has
executed a written agreement that
specifies the material terms and
conditions under which the information
is provided, or (2) pays for the
information by means of a prepaid
account, credit, debit, charge, or calling
card and the information service
provider gives the calling party an
introductory message disclosing the cost
and other terms and conditions for the
service. The disclosure requirements are
intended to ensure that consumers
know when charges will be levied for
calls to toll-free numbers and are able to
obtain information necessary to make
informed choices about whether to
purchase toll-free information services.
Regulations at 47 CFR 64.1509 of the
Commission rules incorporate the
requirements of 47 U.S.C. (c)(2) and 228
(d)(2)–(3) of the Communications Act.
Common carriers that assign telephone
numbers to pay-per-call services must
disclose to all interested parties, upon
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request, a list of all assigned pay-percall numbers. For each assigned
number, carriers must also make
available: (1) a description of the payper-call services; (2) the total cost per
minute or other fees associated with the
service; and (3) the service provider’s
name, business address, and telephone
number. In addition, carriers handling
pay-per-call services must establish a
toll-free number that consumers may
call to receive information about payper-call services. Finally, the
Commission requires carriers to provide
statements of pay-per-call rights and
responsibilities to new telephone
subscribers at the time service is
established and, although not required
by statute, to all subscribers annually.
Under 47 CFR 64.1510 of the
Commission’s rules, telephone bills
containing charges for interstate payper-call and other information services
must include information detailing
consumers’ rights and responsibilities
with respect to these charges.
Specifically, telephone bills carrying
pay-per-call charges must include a
consumer notification stating that: (1)
the charges are for non-communication
services; (2) local and long distance
telephone services may not be
disconnected for failure to pay per-call
charges; (3) pay-per-call (900 number)
blocking is available upon request; and
(4) access to pay-per-call services may
be involuntarily blocked for failure to
pay per-call charges. In addition, each
call billed must show the type of
services, the amount of the charge, and
the date, time, and duration of the call.
Finally, the bill must display a toll-free
number which subscribers may call to
obtain information about pay-per-call
services. Similar billing disclosure
requirements apply to charges for
information services either billed to
subscribers on a collect basis or
accessed by subscribers through a tollfree number. The billing disclosure
requirements are intended to ensure that
telephone subscribers billed for pay-percall or other information services can
understand the charges levied and are
informed of their rights and
responsibilities with respect to payment
of such charges.
Federal Communications Commission.
Marlene Dortch,
Secretary, Office of the Secretary.
[FR Doc. 2024–27547 Filed 12–2–24; 8:45 am]
BILLING CODE 6712–01–P
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE
CORPORATION
Joint Report to Congressional
Committees: Differences in
Accounting and Capital Standards
Among the Federal Banking Agencies
as of September 30, 2024
Office of the Comptroller of the
Currency, Treasury; Board of Governors
of the Federal Reserve System; and
Federal Deposit Insurance Corporation.
ACTION: Report to congressional
committees.
AGENCY:
The Office of the Comptroller
of the Currency (OCC), the Board of
Governors of the Federal Reserve
System (Board), and the Federal Deposit
Insurance Corporation (FDIC)
(collectively, the agencies) have
prepared this report pursuant to section
37(c) of the Federal Deposit Insurance
Act. Section 37(c) requires the agencies
to jointly submit an annual report to the
Committee on Financial Services of the
U.S. House of Representatives and to the
Committee on Banking, Housing, and
Urban Affairs of the U.S. Senate
describing differences among the
accounting and capital standards used
by the agencies for insured depository
institutions (institutions). Section 37(c)
requires that this report be published in
the Federal Register. The agencies have
not identified any material differences
among the agencies’ accounting and
capital standards applicable to the
institutions they regulate and supervise.
FOR FURTHER INFORMATION CONTACT:
OCC: Joshua Kuntz, Risk Expert,
Capital Policy, (202) 649–5074, Carl
Kaminski, Assistant Director, Chief
Counsel’s Office, (202) 649–5869, Office
of the Comptroller of the Currency, 400
7th Street SW, Washington, DC 20219.
If you are deaf, hard of hearing, or have
a speech disability, please dial 7–1–1 to
access telecommunications relay
services.
Board: Andrew Willis, Manager, (202)
912–4323, Daniel Schwindt, Financial
Institution Policy Analyst III, (202) 960–
5463, Division of Supervision and
Regulation, Mark Buresh, Senior Special
Counsel (202) 452–5270 and Jasmin
Keskinen, Senior Attorney, (202) 475–
6650, Legal Division, Board of
Governors of the Federal Reserve
System, 20th Street and Constitution
Avenue NW, Washington, DC 20551.
SUMMARY:
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Federal Register / Vol. 89, No. 232 / Tuesday, December 3, 2024 / Notices
For users of Telecommunications
Device for the Deaf (TDD) and TTY–
TRS, please call 711 from any
telephone, anywhere in the United
States.
FDIC: Benedetto Bosco, Chief, Capital
Policy Section, (703) 245–0778,
Christine Bouvier, Assistant Chief
Accountant, (202) 898–7289, Richard
Smith, Capital Policy Analyst, Capital
Policy Section, (703) 254–0782, Division
of Risk Management Supervision,
Merritt Pardini, Counsel, (202) 898–
6680, Legal Division, Federal Deposit
Insurance Corporation, 550 17th Street
NW, Washington, DC 20429.
SUPPLEMENTARY INFORMATION: The text of
the report follows:
Report to Congress
Report to the Committee on Financial
Services of the U.S. House of
Representatives and to the Committee
on Banking, Housing, and Urban
Affairs of the U.S. Senate Regarding
Differences in Accounting and Capital
Standards Among the Federal Banking
Agencies
Introduction
In accordance with section 37(c),1 the
agencies are submitting this joint report,
which covers differences among their
accounting and capital standards
existing as of September 30, 2024,
applicable to institutions.2 As of
September 30, 2024, the agencies have
not identified any material differences
among the agencies’ accounting
standards applicable to institutions.
In 2013, the agencies revised the riskbased and leverage capital rule for
institutions (capital rule),3 which
harmonized the agencies’ capital rule in
a comprehensive manner.4 Since 2013,
the agencies have revised the capital
1 12
U.S.C. 1831n(c)(1) and 12 U.S.C. 1831n(c)(3).
not required under section 37(c), this
report includes descriptions of certain of the
Board’s capital standards applicable to depository
institution holding companies where such
descriptions are relevant to the discussion of capital
standards applicable to institutions.
3 See 78 FR 62018 (October 11, 2013) (final rule
issued by the OCC and the Board); 78 FR 55340
(September 10, 2013) (interim final rule issued by
the FDIC). The FDIC later issued its final rule in 79
FR 20754 (April 14, 2014). The agencies’ respective
capital rule is at 12 CFR part 3 (OCC), 12 CFR part
217 (Board), and 12 CFR part 324 (FDIC). The
capital rule applies to institutions, as well as to
certain bank holding companies (BHCs) and savings
and loan holding companies (SLHCs). See also 12
CFR 217.1(c).
4 The capital rule reflects the scope of each
agency’s regulatory jurisdiction. For example, the
Board’s capital rule includes requirements related
to BHCs, SLHCs, and state member banks (SMBs),
while the FDIC’s capital rule includes provisions
for state nonmember banks and state savings
associations, and the OCC’s capital rule includes
provisions for national banks and federal savings
associations.
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2 Although
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rule on several occasions, further
reducing the number of differences in
the agencies’ capital rule. Today, only a
few differences remain, which are
statutorily mandated for certain
categories of institutions, or which
reflect certain technical, generally
nonmaterial differences among the
agencies’ capital rule. No new material
differences were identified in the capital
standards applicable to institutions in
this report compared to the previous
report submitted by the agencies
pursuant to section 37(c).
Differences in the Standards Among the
Federal Banking Agencies
Differences in Accounting Standards
As of September 30, 2024, the
agencies have not identified any
material differences among themselves
in the accounting standards applicable
to institutions.
Differences in Capital Standards
The following are the remaining
technical differences among the capital
standards of the agencies’ capital rule.5
Definitions
The agencies’ capital rule largely
contains the same definitions.6 The
differences that exist generally serve to
accommodate the different needs of the
institutions that each agency charters,
regulates, and/or supervises.
The agencies’ capital rule has
differing definitions of a pre-sold
construction loan. The capital rule of all
three agencies provides that a pre-sold
construction loan means any ‘‘one-tofour family residential construction loan
to a builder that meets the requirements
of section 618(a)(1) or (2) of the
Resolution Trust Corporation
Refinancing, Restructuring, and
Improvement Act of 1991 (12 U.S.C.
1831n), and, in addition to other
criteria, the purchaser has not
terminated the contract.’’ 7 The Board’s
definition provides further clarification
that, if a purchaser has terminated the
contract, the institution must
immediately apply a 100 percent risk
weight to the loan and report the revised
risk weight in the next quarterly
Consolidated Reports of Condition and
Income (Call Report).8 Similarly, if the
purchaser has terminated the contract,
the OCC and FDIC capital rule would
immediately disqualify the loan from
5 Certain minor differences, such as terminology
specific to each agency for the institutions that it
supervises, are not included in this report.
6 See 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); 12
CFR 324.2 (FDIC).
7 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); 12 CFR
324.2 (FDIC).
8 12 CFR 217.2.
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95787
receiving a 50 percent risk weight, and
would apply a 100 percent risk weight
to the loan. The change in risk weight
would be reflected in the next quarterly
Call Report. Thus, the minor wording
difference between the agencies should
have no practical consequence.
Capital Components and Eligibility
Criteria for Regulatory Capital
Instruments
While the capital rule generally
provides uniform eligibility criteria for
regulatory capital instruments, there are
some textual differences among the
agencies’ capital rule. The capital rule of
each of the three agencies requires that,
for an instrument to qualify as common
equity tier 1 or additional tier 1 capital,
cash dividend payments be paid out of
net income and retained earnings, but
the Board’s capital rule also allows cash
dividend payments to be paid out of
related surplus.9 The provision in the
Board’s capital rule that allows
dividends to be paid out of related
surplus is a difference in substance
among the agencies’ capital rule.
However, due to the restrictions on
institutions regulated by the Board in
separate regulations, this additional
language in the Board’s rule has a
practical impact only on bank holding
companies (BHCs) and savings and loan
holding companies (SLHCs) and is not
a difference as applied to institutions.
The agencies apply the criteria for
determining eligibility of regulatory
capital instruments in a manner that
ensures consistent outcomes for
institutions.
Both the Board’s capital rule and the
FDIC’s capital rule also include an
additional sentence noting that
institutions regulated by each agency
are subject to restrictions independent
of the capital rule on paying dividends
out of surplus and/or that would result
in a reduction of capital stock.10 These
additional sentences do not create
differences in substance between the
agencies’ capital standards, but rather
note that restrictions apply under
separate regulations.
In addition, the Board’s capital rule
includes a requirement that a Boardregulated institution must obtain prior
approval before redeeming regulatory
9 12 CFR 217.20(b)(1)(v) and 217.20(c)(1)(viii)
(Board).
10 12 CFR 217.20(b)(1)(v) and 217.20(c)(1)(viii)
(Board); 12 CFR 324.20(b)(1)(v) and
324.20(c)(1)(viii) (FDIC). Although not referenced in
the capital rule, the OCC has similar restrictions on
dividends; 12 CFR 5.55 and 12 CFR 5.63. Certain
restrictions on the payment of dividends that apply
under separate regulations, and therefore not
discussed in this report, are different among the
agencies. Compare 12 CFR 208.5 (Board) and 12
CFR 5.64 (OCC) with 12 CFR 303.241 (FDIC).
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Federal Register / Vol. 89, No. 232 / Tuesday, December 3, 2024 / Notices
capital instruments.11 This requirement
effectively applies only to a BHC or an
SLHC and is, therefore, not included in
the OCC’s and FDIC’s capital rule. All
three agencies require institutions to
obtain prior approval before redeeming
regulatory capital instruments in other
regulations.12 The additional provision
in the Board’s capital rule, therefore,
only has a practical impact on BHCs and
SLHCs and is not a difference as applied
to institutions.
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Capital Deductions
There is a technical difference
between the FDIC’s capital rule and the
OCC’s and Board’s capital rule with
regard to an explicit requirement for
deduction of examiner-identified losses.
The agencies require their examiners to
determine whether their respective
supervised institutions have
appropriately identified losses. The
FDIC’s capital rule, however, explicitly
requires FDIC-supervised institutions to
deduct identified losses from common
equity tier 1 capital elements, to the
extent that the institutions’ common
equity tier 1 capital would have been
reduced if the appropriate accounting
entries had been recorded.13 Generally,
identified losses are those items that an
examiner determines to be chargeable
against income, capital, or general
valuation allowances.
For example, identified losses may
include, among other items, assets
classified as loss, off-balance-sheet
items classified as loss, any expenses
that are necessary for the institution to
record in order to replenish its general
valuation allowances to an adequate
level, and estimated losses on
contingent liabilities. The Board and the
OCC expect their supervised institutions
to promptly recognize examineridentified losses, but the requirement is
not explicit under their capital rule.
Instead, the Board and the OCC apply
their supervisory authorities to ensure
that their supervised institutions charge
off any identified losses.
Subsidiaries of Savings Associations
There are special statutory
requirements for the agencies’ capital
treatment of a savings association’s
investment in or credit to its
subsidiaries as compared with the
capital treatment of such transactions
between other types of institutions and
their subsidiaries. Specifically, the
Home Owners’ Loan Act (HOLA)
11 Board-regulated institution refers to an SMB, a
BHC, or an SLHC. See 12. CFR 217.2; 12 CFR
217.20(f); see also 12 CFR 217.20(b)(1)(iii).
12 See 12 CFR 5.46, 5.47, 5.55, and 5.56 (OCC);
12 CFR 208.5 (Board); 12 CFR 303.241 (FDIC).
13 12 CFR 324.22(a)(9).
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19:41 Dec 02, 2024
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distinguishes between subsidiaries of
savings associations engaged in
activities that are permissible for
national banks and those engaged in
activities that are not permissible for
national banks.14
When subsidiaries of a savings
association are engaged in activities that
are not permissible for national banks,15
the parent savings association generally
must deduct the parent’s investment in
and extensions of credit to these
subsidiaries from the capital of the
parent savings association. If a
subsidiary of a savings association
engages solely in activities permissible
for national banks, no deduction is
required, and investments in and loans
to that organization may be assigned the
risk weight appropriate for the
activity.16 As the appropriate federal
banking agencies for federal and state
savings associations, respectively, the
OCC and the FDIC apply this capital
treatment to those types of institutions.
The Board’s regulatory capital
framework does not apply to savings
associations and, therefore, does not
include this requirement.
Tangible Capital Requirement
Federal law subjects savings
associations to a specific tangible capital
requirement but does not similarly do so
with respect to banks. Under section
5(t)(2)(B) of HOLA, savings associations
are required to maintain tangible capital
in an amount not less than 1.5 percent
of total assets.17 The capital rule of the
OCC and the FDIC includes a
requirement that savings associations
maintain a tangible capital ratio of 1.5
percent.18 This statutory requirement
does not apply to banks and, thus, there
is no comparable regulatory provision
for banks. The distinction is of little
practical consequence, however,
because under the Prompt Corrective
Action (PCA) framework, all institutions
are considered critically
undercapitalized if their tangible equity
falls below 2 percent of total assets.19
Generally speaking, the appropriate
14 12
U.S.C. 1464(t)(5).
15 Subsidiaries engaged in activities not
permissible for national banks are considered nonincludable subsidiaries.
16 A deduction from capital is only required to the
extent that the savings association’s investment
exceeds the generally applicable thresholds for
deduction of investments in the capital of an
unconsolidated financial institution.
17 12 U.S.C. 1464(t)(1)(A)(ii) and (t)(2)(B).
18 12 CFR 3.10(a)(6) (OCC); 12 CFR
324.10(a)(1)(vi) (FDIC). The Board’s regulatory
capital framework does not apply to savings
associations and, therefore, does not include this
requirement.
19 See 12 U.S.C. 1831o(c)(3); see also 12 CFR 6.4
(OCC); 12 CFR 208.45 (Board); 12 CFR 324.403
(FDIC).
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federal banking agency must appoint a
receiver within 90 days after an
institution becomes critically
undercapitalized.20
Enhanced Supplementary Leverage
Ratio
The agencies adopted enhanced
supplementary leverage ratio standards
that took effect beginning on January 1,
2018.21 These standards require certain
BHCs to exceed a 5 percent
supplementary leverage ratio to avoid
limitations on distributions and certain
discretionary bonus payments and also
require the subsidiary institutions of
these BHCs to meet a 6 percent
supplementary leverage ratio to be
considered ‘‘well capitalized’’ under the
PCA framework.22 The rule text
establishing the scope of application for
the enhanced supplementary leverage
ratio differs among the agencies. The
Board and the FDIC apply the enhanced
supplementary leverage ratio standards
for institutions based on parent BHCs
being identified as global systemically
important BHCs as defined in 12 CFR
217.2.23 The OCC applies enhanced
supplementary leverage ratio standards
to the institution subsidiaries under
their supervisory jurisdiction of a toptier BHC that has more than $700 billion
in total assets or more than $10 trillion
in assets under custody.24
Michael J. Hsu,
Acting Comptroller of the Currency. Board
of Governors of the Federal Reserve System.
Ann E. Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.
Dated at Washington, DC, on November 25,
2024.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2024–28227 Filed 12–2–24; 8:45 am]
BILLING CODE 6210–01–P; 6714–01–P; 4810–33–P
FEDERAL RESERVE SYSTEM
Change in Bank Control Notices;
Acquisitions of Shares of a Bank or
Bank Holding Company
The notificants listed below have
applied under the Change in Bank
Control Act (Act) (12 U.S.C. 1817(j)) and
§ 225.41 of the Board’s Regulation Y (12
CFR 225.41) to acquire shares of a bank
20 12
U.S.C. 1831o(h)(3)(A).
79 FR 24,528 (May 1, 2014).
22 12 CFR 6.4(b)(1)(i)(D)(2) (OCC); 12 CFR
208.43(b)(1)(i)(D)(2) (Board); 12 CFR
324.403(b)(1)(ii) (FDIC).
23 12 CFR 208.43(b)(1)(i)(D)(2) (Board); 12 CFR
324.403(b)(1)(ii) (FDIC).
24 12 CFR 6.4(b)(1)(i)(D)(2) (OCC).
21 See
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]]>Agencies
[Federal Register Volume 89, Number 232 (Tuesday, December 3, 2024)]
[Notices]
[Pages 95786-95788]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28227]
=======================================================================
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE CORPORATION
Joint Report to Congressional Committees: Differences in
Accounting and Capital Standards Among the Federal Banking Agencies as
of September 30, 2024
AGENCY: Office of the Comptroller of the Currency, Treasury; Board of
Governors of the Federal Reserve System; and Federal Deposit Insurance
Corporation.
ACTION: Report to congressional committees.
-----------------------------------------------------------------------
SUMMARY: The Office of the Comptroller of the Currency (OCC), the Board
of Governors of the Federal Reserve System (Board), and the Federal
Deposit Insurance Corporation (FDIC) (collectively, the agencies) have
prepared this report pursuant to section 37(c) of the Federal Deposit
Insurance Act. Section 37(c) requires the agencies to jointly submit an
annual report to the Committee on Financial Services of the U.S. House
of Representatives and to the Committee on Banking, Housing, and Urban
Affairs of the U.S. Senate describing differences among the accounting
and capital standards used by the agencies for insured depository
institutions (institutions). Section 37(c) requires that this report be
published in the Federal Register. The agencies have not identified any
material differences among the agencies' accounting and capital
standards applicable to the institutions they regulate and supervise.
FOR FURTHER INFORMATION CONTACT:
OCC: Joshua Kuntz, Risk Expert, Capital Policy, (202) 649-5074,
Carl Kaminski, Assistant Director, Chief Counsel's Office, (202) 649-
5869, Office of the Comptroller of the Currency, 400 7th Street SW,
Washington, DC 20219. If you are deaf, hard of hearing, or have a
speech disability, please dial 7-1-1 to access telecommunications relay
services.
Board: Andrew Willis, Manager, (202) 912-4323, Daniel Schwindt,
Financial Institution Policy Analyst III, (202) 960-5463, Division of
Supervision and Regulation, Mark Buresh, Senior Special Counsel (202)
452-5270 and Jasmin Keskinen, Senior Attorney, (202) 475-6650, Legal
Division, Board of Governors of the Federal Reserve System, 20th Street
and Constitution Avenue NW, Washington, DC 20551.
[[Page 95787]]
For users of Telecommunications Device for the Deaf (TDD) and TTY-TRS,
please call 711 from any telephone, anywhere in the United States.
FDIC: Benedetto Bosco, Chief, Capital Policy Section, (703) 245-
0778, Christine Bouvier, Assistant Chief Accountant, (202) 898-7289,
Richard Smith, Capital Policy Analyst, Capital Policy Section, (703)
254-0782, Division of Risk Management Supervision, Merritt Pardini,
Counsel, (202) 898-6680, Legal Division, Federal Deposit Insurance
Corporation, 550 17th Street NW, Washington, DC 20429.
SUPPLEMENTARY INFORMATION: The text of the report follows:
Report to Congress
Report to the Committee on Financial Services of the U.S. House of
Representatives and to the Committee on Banking, Housing, and Urban
Affairs of the U.S. Senate Regarding Differences in Accounting and
Capital Standards Among the Federal Banking Agencies
Introduction
In accordance with section 37(c),\1\ the agencies are submitting
this joint report, which covers differences among their accounting and
capital standards existing as of September 30, 2024, applicable to
institutions.\2\ As of September 30, 2024, the agencies have not
identified any material differences among the agencies' accounting
standards applicable to institutions.
---------------------------------------------------------------------------
\1\ 12 U.S.C. 1831n(c)(1) and 12 U.S.C. 1831n(c)(3).
\2\ Although not required under section 37(c), this report
includes descriptions of certain of the Board's capital standards
applicable to depository institution holding companies where such
descriptions are relevant to the discussion of capital standards
applicable to institutions.
---------------------------------------------------------------------------
In 2013, the agencies revised the risk-based and leverage capital
rule for institutions (capital rule),\3\ which harmonized the agencies'
capital rule in a comprehensive manner.\4\ Since 2013, the agencies
have revised the capital rule on several occasions, further reducing
the number of differences in the agencies' capital rule. Today, only a
few differences remain, which are statutorily mandated for certain
categories of institutions, or which reflect certain technical,
generally nonmaterial differences among the agencies' capital rule. No
new material differences were identified in the capital standards
applicable to institutions in this report compared to the previous
report submitted by the agencies pursuant to section 37(c).
---------------------------------------------------------------------------
\3\ See 78 FR 62018 (October 11, 2013) (final rule issued by the
OCC and the Board); 78 FR 55340 (September 10, 2013) (interim final
rule issued by the FDIC). The FDIC later issued its final rule in 79
FR 20754 (April 14, 2014). The agencies' respective capital rule is
at 12 CFR part 3 (OCC), 12 CFR part 217 (Board), and 12 CFR part 324
(FDIC). The capital rule applies to institutions, as well as to
certain bank holding companies (BHCs) and savings and loan holding
companies (SLHCs). See also 12 CFR 217.1(c).
\4\ The capital rule reflects the scope of each agency's
regulatory jurisdiction. For example, the Board's capital rule
includes requirements related to BHCs, SLHCs, and state member banks
(SMBs), while the FDIC's capital rule includes provisions for state
nonmember banks and state savings associations, and the OCC's
capital rule includes provisions for national banks and federal
savings associations.
---------------------------------------------------------------------------
Differences in the Standards Among the Federal Banking Agencies
Differences in Accounting Standards
As of September 30, 2024, the agencies have not identified any
material differences among themselves in the accounting standards
applicable to institutions.
Differences in Capital Standards
The following are the remaining technical differences among the
capital standards of the agencies' capital rule.\5\
---------------------------------------------------------------------------
\5\ Certain minor differences, such as terminology specific to
each agency for the institutions that it supervises, are not
included in this report.
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Definitions
The agencies' capital rule largely contains the same
definitions.\6\ The differences that exist generally serve to
accommodate the different needs of the institutions that each agency
charters, regulates, and/or supervises.
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\6\ See 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); 12 CFR 324.2
(FDIC).
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The agencies' capital rule has differing definitions of a pre-sold
construction loan. The capital rule of all three agencies provides that
a pre-sold construction loan means any ``one-to-four family residential
construction loan to a builder that meets the requirements of section
618(a)(1) or (2) of the Resolution Trust Corporation Refinancing,
Restructuring, and Improvement Act of 1991 (12 U.S.C. 1831n), and, in
addition to other criteria, the purchaser has not terminated the
contract.'' \7\ The Board's definition provides further clarification
that, if a purchaser has terminated the contract, the institution must
immediately apply a 100 percent risk weight to the loan and report the
revised risk weight in the next quarterly Consolidated Reports of
Condition and Income (Call Report).\8\ Similarly, if the purchaser has
terminated the contract, the OCC and FDIC capital rule would
immediately disqualify the loan from receiving a 50 percent risk
weight, and would apply a 100 percent risk weight to the loan. The
change in risk weight would be reflected in the next quarterly Call
Report. Thus, the minor wording difference between the agencies should
have no practical consequence.
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\7\ 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); 12 CFR 324.2 (FDIC).
\8\ 12 CFR 217.2.
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Capital Components and Eligibility Criteria for Regulatory Capital
Instruments
While the capital rule generally provides uniform eligibility
criteria for regulatory capital instruments, there are some textual
differences among the agencies' capital rule. The capital rule of each
of the three agencies requires that, for an instrument to qualify as
common equity tier 1 or additional tier 1 capital, cash dividend
payments be paid out of net income and retained earnings, but the
Board's capital rule also allows cash dividend payments to be paid out
of related surplus.\9\ The provision in the Board's capital rule that
allows dividends to be paid out of related surplus is a difference in
substance among the agencies' capital rule. However, due to the
restrictions on institutions regulated by the Board in separate
regulations, this additional language in the Board's rule has a
practical impact only on bank holding companies (BHCs) and savings and
loan holding companies (SLHCs) and is not a difference as applied to
institutions. The agencies apply the criteria for determining
eligibility of regulatory capital instruments in a manner that ensures
consistent outcomes for institutions.
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\9\ 12 CFR 217.20(b)(1)(v) and 217.20(c)(1)(viii) (Board).
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Both the Board's capital rule and the FDIC's capital rule also
include an additional sentence noting that institutions regulated by
each agency are subject to restrictions independent of the capital rule
on paying dividends out of surplus and/or that would result in a
reduction of capital stock.\10\ These additional sentences do not
create differences in substance between the agencies' capital
standards, but rather note that restrictions apply under separate
regulations.
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\10\ 12 CFR 217.20(b)(1)(v) and 217.20(c)(1)(viii) (Board); 12
CFR 324.20(b)(1)(v) and 324.20(c)(1)(viii) (FDIC). Although not
referenced in the capital rule, the OCC has similar restrictions on
dividends; 12 CFR 5.55 and 12 CFR 5.63. Certain restrictions on the
payment of dividends that apply under separate regulations, and
therefore not discussed in this report, are different among the
agencies. Compare 12 CFR 208.5 (Board) and 12 CFR 5.64 (OCC) with 12
CFR 303.241 (FDIC).
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In addition, the Board's capital rule includes a requirement that a
Board-regulated institution must obtain prior approval before redeeming
regulatory
[[Page 95788]]
capital instruments.\11\ This requirement effectively applies only to a
BHC or an SLHC and is, therefore, not included in the OCC's and FDIC's
capital rule. All three agencies require institutions to obtain prior
approval before redeeming regulatory capital instruments in other
regulations.\12\ The additional provision in the Board's capital rule,
therefore, only has a practical impact on BHCs and SLHCs and is not a
difference as applied to institutions.
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\11\ Board-regulated institution refers to an SMB, a BHC, or an
SLHC. See 12. CFR 217.2; 12 CFR 217.20(f); see also 12 CFR
217.20(b)(1)(iii).
\12\ See 12 CFR 5.46, 5.47, 5.55, and 5.56 (OCC); 12 CFR 208.5
(Board); 12 CFR 303.241 (FDIC).
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Capital Deductions
There is a technical difference between the FDIC's capital rule and
the OCC's and Board's capital rule with regard to an explicit
requirement for deduction of examiner-identified losses. The agencies
require their examiners to determine whether their respective
supervised institutions have appropriately identified losses. The
FDIC's capital rule, however, explicitly requires FDIC-supervised
institutions to deduct identified losses from common equity tier 1
capital elements, to the extent that the institutions' common equity
tier 1 capital would have been reduced if the appropriate accounting
entries had been recorded.\13\ Generally, identified losses are those
items that an examiner determines to be chargeable against income,
capital, or general valuation allowances.
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\13\ 12 CFR 324.22(a)(9).
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For example, identified losses may include, among other items,
assets classified as loss, off-balance-sheet items classified as loss,
any expenses that are necessary for the institution to record in order
to replenish its general valuation allowances to an adequate level, and
estimated losses on contingent liabilities. The Board and the OCC
expect their supervised institutions to promptly recognize examiner-
identified losses, but the requirement is not explicit under their
capital rule. Instead, the Board and the OCC apply their supervisory
authorities to ensure that their supervised institutions charge off any
identified losses.
Subsidiaries of Savings Associations
There are special statutory requirements for the agencies' capital
treatment of a savings association's investment in or credit to its
subsidiaries as compared with the capital treatment of such
transactions between other types of institutions and their
subsidiaries. Specifically, the Home Owners' Loan Act (HOLA)
distinguishes between subsidiaries of savings associations engaged in
activities that are permissible for national banks and those engaged in
activities that are not permissible for national banks.\14\
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\14\ 12 U.S.C. 1464(t)(5).
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When subsidiaries of a savings association are engaged in
activities that are not permissible for national banks,\15\ the parent
savings association generally must deduct the parent's investment in
and extensions of credit to these subsidiaries from the capital of the
parent savings association. If a subsidiary of a savings association
engages solely in activities permissible for national banks, no
deduction is required, and investments in and loans to that
organization may be assigned the risk weight appropriate for the
activity.\16\ As the appropriate federal banking agencies for federal
and state savings associations, respectively, the OCC and the FDIC
apply this capital treatment to those types of institutions. The
Board's regulatory capital framework does not apply to savings
associations and, therefore, does not include this requirement.
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\15\ Subsidiaries engaged in activities not permissible for
national banks are considered non-includable subsidiaries.
\16\ A deduction from capital is only required to the extent
that the savings association's investment exceeds the generally
applicable thresholds for deduction of investments in the capital of
an unconsolidated financial institution.
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Tangible Capital Requirement
Federal law subjects savings associations to a specific tangible
capital requirement but does not similarly do so with respect to banks.
Under section 5(t)(2)(B) of HOLA, savings associations are required to
maintain tangible capital in an amount not less than 1.5 percent of
total assets.\17\ The capital rule of the OCC and the FDIC includes a
requirement that savings associations maintain a tangible capital ratio
of 1.5 percent.\18\ This statutory requirement does not apply to banks
and, thus, there is no comparable regulatory provision for banks. The
distinction is of little practical consequence, however, because under
the Prompt Corrective Action (PCA) framework, all institutions are
considered critically undercapitalized if their tangible equity falls
below 2 percent of total assets.\19\ Generally speaking, the
appropriate federal banking agency must appoint a receiver within 90
days after an institution becomes critically undercapitalized.\20\
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\17\ 12 U.S.C. 1464(t)(1)(A)(ii) and (t)(2)(B).
\18\ 12 CFR 3.10(a)(6) (OCC); 12 CFR 324.10(a)(1)(vi) (FDIC).
The Board's regulatory capital framework does not apply to savings
associations and, therefore, does not include this requirement.
\19\ See 12 U.S.C. 1831o(c)(3); see also 12 CFR 6.4 (OCC); 12
CFR 208.45 (Board); 12 CFR 324.403 (FDIC).
\20\ 12 U.S.C. 1831o(h)(3)(A).
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Enhanced Supplementary Leverage Ratio
The agencies adopted enhanced supplementary leverage ratio
standards that took effect beginning on January 1, 2018.\21\ These
standards require certain BHCs to exceed a 5 percent supplementary
leverage ratio to avoid limitations on distributions and certain
discretionary bonus payments and also require the subsidiary
institutions of these BHCs to meet a 6 percent supplementary leverage
ratio to be considered ``well capitalized'' under the PCA
framework.\22\ The rule text establishing the scope of application for
the enhanced supplementary leverage ratio differs among the agencies.
The Board and the FDIC apply the enhanced supplementary leverage ratio
standards for institutions based on parent BHCs being identified as
global systemically important BHCs as defined in 12 CFR 217.2.\23\ The
OCC applies enhanced supplementary leverage ratio standards to the
institution subsidiaries under their supervisory jurisdiction of a top-
tier BHC that has more than $700 billion in total assets or more than
$10 trillion in assets under custody.\24\
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\21\ See 79 FR 24,528 (May 1, 2014).
\22\ 12 CFR 6.4(b)(1)(i)(D)(2) (OCC); 12 CFR
208.43(b)(1)(i)(D)(2) (Board); 12 CFR 324.403(b)(1)(ii) (FDIC).
\23\ 12 CFR 208.43(b)(1)(i)(D)(2) (Board); 12 CFR
324.403(b)(1)(ii) (FDIC).
\24\ 12 CFR 6.4(b)(1)(i)(D)(2) (OCC).
Michael J. Hsu,
Acting Comptroller of the Currency. Board of Governors of the Federal
Reserve System.
Ann E. Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.
Dated at Washington, DC, on November 25, 2024.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2024-28227 Filed 12-2-24; 8:45 am]
BILLING CODE 6210-01-P; 6714-01-P; 4810-33-P
