Federal Reserve Board Issues Long-Awaited Capital Rules

On June 7, 2012, the Federal Reserve Board took action to bring the U.S. capital adequacy framework in line with various international initiatives designed to bolster the quality and quantity of capital of banking organizations. Through three related proposals and one final rule, the Federal Reserve (together with the other federal banking agencies, which are expected to act this week) would completely revise the overall structure of its capital adequacy rules to implement both international agreements on capital and requirements imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The attached memorandum provides a high-level analysis of the releases and highlights certain key issues, including certain significant divergences from the Basel frameworks. The proposals will be open for comment until September 7, 2012. The final market risk capital rule will become effective January 1, 2013.