💰Proposed Changes to Capital Plan Rule and Stress Capital Buffer
Modifications to the Capital Plan Rule and Stress Capital Buffer Requirement
Summary
The Board is inviting public comment on a notice of proposed rulemaking (the proposal) that would amend the calculation of the Board's stress capital buffer requirement applicable to certain large bank holding companies, savings and loan holding companies, U.S. intermediate holding companies of foreign banking organizations, and nonbank financial companies supervised by the Board to reduce the volatility of the stress capital buffer requirement. The proposal would use the average of the maximum common equity tier 1 capital declines projected in each of the Board's prior two annual supervisory stress tests to inform a firm's stress capital buffer requirement. The proposal would also extend the annual effective date of the stress capital buffer requirement by one quarter, to January 1, to provide additional time for firms to comply with the requirement. In addition, the proposal would make changes to the FR Y-14A/Q/M reports to collect additional net income data that would improve the accuracy of the stress capital buffer requirement calculation, as well as remove data items that are no longer needed to conduct the supervisory stress test. The changes in the proposal are not designed to materially affect overall capital requirements and would decrease regulatory reporting burden.
Agencies
- Federal Reserve System
Business Impact
$$$ - High
The proposed modifications to the Capital Plan Rule and stress capital buffer requirements directly affect large bank holding companies and other financial entities by altering how capital buffers are calculated. This impacts their compliance requirements and can influence lending practices, risk assessments, and capital allocation strategies. The extension of the compliance period adds to operational flexibility.