Agencies adopt proposal on small bank capital rules

Northwestern Financial Review, Jul 15-Jul 31, 2008

FDIC and the Federal Reserve approved a proposal to level the playing field between small and large banks regarding capital requirements under the Basel Accord. On June 26, the regulators approved an mteragency proposal that would provide banks with the option to adopt an alternative risk-based capital framework based largely upon the "standardized approach" set forth in the Basel Il Capital Accord.

The approach would be available to all banks except the largest and most complex banks that are subject to the "advanced approaches" of Basel II. "The standardized approach proposal is expected to add greater risk sensitivity without creating excessive complexity and burden and, thus, should minimize competitive inequities between large and small banks," said FDIC Chairman Sheila Bair.