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Financial Institution Letter

Capital Standards

SUBJECT: Final Rule Revising Risk-Based and Leverage Capital Standards

The Federal Deposit Insurance Corporation (FDIC) Board of Directors has approved the attached final rule revising the risk-based and leverage capital standards. The final rule will take effect April 1, 1999. However, institutions may choose to apply the rule beginning March 2, 1999.

The FDIC's rule is being issued jointly with the rules of the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision. The agencies' rule changes will eliminate inconsistencies in the risk-based capital treatment of:

  • Construction loans on presold residential properties,
  • Real estate loans secured by junior liens on 1- to 4-family residential real estate, and
  • Investments in mutual funds.

The final rule will also simplify and make uniform the agencies' Tier 1 leverage capital standards.

For more information, please contact Examination Specialists Stephen G. Pfeifer (202-898-8904) or Carol L. Liquori (202-898-7289) in the FDIC's Division of Supervision.

James L. Sexton

Attachments:  March 2, 1999 Federal Register , Vol. 64, No. 40, pages 10193-10201
HTML Format PDF Format (70 Kb - PDF help or hard copy )

Distribution:   FDIC-Supervised Banks (Commercial and Savings)

NOTE: Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 801 17th Street NW, Room 100, Washington, DC 20434 (800-276-6003 or (703) 562-2200).

Last Updated: March 2, 1999