For immediate release

The Federal Reserve Board today requested public comment on a joint interagency proposal to revise risk-based capital standards to address the regulatory capital treatment of recourse obligations and direct credit substitutes that expose banks, bank holding companies, and thrifts to credit risk. Comment is requested by February 3, l998. The proposal would treat direct credit substitutes and recourse obligations consistently and would use credit ratings and possibly certain other alternative approaches to match the risk-based capital assessment more closely to a banking organization's relative risk of loss in asset securitizations. The joint proposal by the Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision was developed under the auspices of the Federal Financial Institutions Examination Council. The federal banking agencies intend that any final rules adopted in connection with this proposal that result in increased risk-based capital requirements for banking organizations apply only to transactions consummated after the effective date of the final rules. The interagency notice is attached.

Summary and proposed rule (222 KB PDF)

1997 Banking and consumer regulatory policy