leverage ratio

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On May 15, 2020, the federal banking agencies issued an interim final rule to permit depository institutions to exclude from their supplementary leverage ratio (“SLR”) denominators through March 31, 2021 the balance sheet value of U.S. Treasury securities and funds on deposit at a Federal Reserve Bank, subject to restrictions on capital distributions.  The interim final rule complements a similar interim final rule that the Federal Reserve issued in April, which excluded the same set of assets from the SLR denominator of bank holding companies, savings and loan holding companies, and intermediate holding companies of foreign banking organizations subject to the SLR (the “Holdco Rule”).
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Continue Reading Temporary SLR Relief Extended to Banks, With Condition

Yesterday, on Sunday, March 22, 2020, U.S. Senate Republicans released the latest version of their COVID-19-related stimulus bill, the Coronavirus Aid, Relief, and Economic Security Act or CARES Act.  The bill contains several measures intended to provide relief to banks, their customers, and broader financial markets.

The latest version of the CARES Act includes the…

Today, March 20, 2020, the Federal Reserve announced that it has amended the terms of its recently announced Money Market Mutual Fund Liquidity Facility (“MMLF”) so as to accept certain U.S. municipal short-term debt as eligible collateral and allow additional types of funds to sell eligible collateral to participating borrowers.  The expansion is intended to support the flow of credit to the economy by taking steps to enhance the liquidity and functioning of crucial state and municipal money markets.
Continue Reading Federal Reserve to Accept U.S. Municipal Short-Term Debt as Eligible Collateral Under Expanded MMLF Program

Yesterday, on March 18, 2020, the Board of Governors of the Federal Reserve System (“Board”) announced the creation of a Money Market Mutual Fund Liquidity Facility (“MMLF”) to provide liquidity support to money market mutual funds (“MMMFs”) by facilitating their sale of certain assets in order to meet redemption requests.  Under the MMLF, the Federal…

The federal banking agencies issued a final rule today that permits banking organizations not subject to the advanced approaches capital rules to adopt simplifications to the calculation of their regulatory capital beginning January 1, 2020, rather than April 1, 2020 as was originally finalized in July 2019.
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Continue Reading Federal Banking Agencies Permit First Quarter 2020 Adoption of Capital Simplifications Rule

On March 29, 2019, the board of the FDIC approved a notice of proposed rulemaking that would revise the supplementary leverage ratio (“SLR”) to exclude certain deposits placed at central banks from custodial banks’ SLR denominators, implementing section 402 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”).  The OCC and Federal Reserve are expected to adopt substantially identical proposals.
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Continue Reading Agencies to Revise SLR to Exclude Custodial Deposits at Central Banks

In a November 9, 2018 speech, Federal Reserve Vice Chairman for Supervision Randal K. Quarles outlined potential adjustments to the revisions to the capital planning regime that the Federal Reserve proposed in April 2018.  Governor Quarles also said he will ask the Federal Reserve to exempt banks with less than $250 billion in assets from the Comprehensive Capital Analysis and Review (“CCAR”) quantitative assessment and supervisory stress testing in 2019 in order to facilitate capital planning moving to a biennial exercise for such banks.

Governor Quarles emphasized that the adjustments “are not intended to alter materially the overall level of capital in the system or the stringency of the regime.”  However, the cumulative impact of the changes outlined in his speech would be to ease the implementation of the SCB and streamline CCAR and capital planning.…

Continue Reading Capital Planning Framework to Continue its Evolution