FHFA issues final rule setting capital requirements for Federal Home Loan Banks.
The Federal Housing Finance Agency has finalized a rule setting capital requirements for Federal Home Loan Banks, carrying over most of the existing Federal Housing Finance Board regulations, but revising the credit risk component of the risk-based capital requirement, as well as the limitations on extensions of unsecured credit. The final rule revises the table numbers to align with the Federal Register’s new formatting standards, which were revised after publication of the proposed rule. The rule is effective Jan. 1, 2020.
The proposed rule kept most of the Federal Housing Finance Board regulations the same, revising the rules for the credit risk component of the risk-based capital requirement and the limitations on extensions of unsecured credit, removing provisions referring to Nationally Recognized Statistical Ratings Organizations.
The final rule includes the following revisions:
- removing requirements that banks calculate credit risk capital charges and unsecured credit limits based on ratings issued by a Nationally Recognized Statistical Rating Organization, instead banks must use their own internal rating methodology;
- revising percentages used in the tables to calculate the credit risk capital charges for advances and non-mortgage assets—FHFA retains the percentages used in the existing table to calculate the capital charges for mortgage-related assets, but revises the approach to identify the appropriate percentage within the table;
- revising the table numbers in the final rule to align with the Federal Register’s new formatting standards, which were revised after publication of the proposed rule.
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