Skip to main content
U.S. flag
An official website of the United States government
Dot gov
The .gov means it’s official. 
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.
Https
The site is secure. 
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Proposed Rulemaking to Address the Temporary Deposit Insurance Assessment Effects of the Optional Regulatory Capital Transitions for Implementing the Current Expected Credit Losses (CECL) Methodology

Deposit Insurance
November 20, 2020

Summary:

On November 17, 2020, the FDIC Board of Directors authorized publication of a notice of proposed rulemaking that would address the temporary deposit insurance assessment effects resulting from certain optional regulatory capital transition provisions relating to the implementation of the current expected credit losses (CECL) methodology. The proposal would remove the double counting of a specified portion of the CECL transitional amount or the modified CECL transitional amount, as applicable, in the calculation of certain financial measures that are used to determine assessment rates for large and highly complex insured depository institutions (IDIs).

Statement of Applicability: This Financial Institution Letter (FIL) has no impact on institutions with less than $10 billion in assets.

Highlights:

  • In 2019 and 2020, the FDIC, the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve System issued rules that allow banking organizations to phase in the adverse effects of CECL implementation on their regulatory capital ratios, and to provide the option to delay, for up to two years, an estimate of CECL’s effect on regulatory capital.
  • For banks electing the CECL regulatory capital transition provision or delay under the 2019 and 2020 rules, a specified portion of the CECL transitional amounts will be double counted in certain financial measures used to determine assessment rates for large and highly complex IDIs and that are calculated using both Tier 1 capital and reserves during the transition period.
  • The proposal would amend the assessment regulations to remove the double counting of a specified portion of the CECL transitional amounts in certain financial measures that are used to determine assessment rates for large and highly complex IDIs.
  • The proposal also would adjust the calculation of the loss severity measure to remove the double counting of a specified portion of the CECL transitional amounts for a large or highly complex IDI.
  • The FDIC would continue to allow the application of the CECL regulatory capital transition provisions to the Tier 1 leverage ratio used in determining deposit insurance assessment rates for all IDIs.
  • In order to implement these adjustments, the proposal would require large and highly complex IDIs that elect a CECL transition provision to report one additional, temporary item on the Consolidated Reports of Condition and Income (Call Report).
  • Comments on the proposed rule will be accepted for 30 days after publication in the Federal Register .

Distribution:

Insured depository institutions with $10 billion or more in total assets

Suggested Routing:

Chief Executive Officer
Chief Financial Officer

Additional Related Topics:

  • Assessments, 12 CFR Part 327
Attachment(s)

Last Updated: November 20, 2020