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Federal Reserve approves proposal to revise regulatory capital rules and offer phase-in approach for CECL

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Apr 13, 2018

The Federal Reserve Board has approved the proposal “Regulatory Capital Rules: Implementation and Transition of the Current Expected Credit Losses [CECL] Methodology for Allowances and Related Adjustments to the Regulatory Capital Rules and Conforming Amendments to Other Regulations,” which the Board jointly issued with two other federal agencies (the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation).

According to the Board’s press release, the joint proposal would revise the Board’s “regulatory capital rules to address and provide an option to phase in the regulatory capital effects of the new accounting standard for credit losses.” The proposal “addresses the regulatory capital treatment of credit loss allowances under the CECL methodology and would allow banking organizations to phase in the day-one regulatory capital effects of CECL adoption over three years. The proposal would revise the Board's regulatory capital rules and other rules to take into consideration the new accounting standard.”

Comments on the proposal are due 60 days after the date of its publication in the Federal Register.

For more information, see the proposal on the Federal Reserve Board’s Web site.

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