• Federal Banking Agencies Issue Report to Congressional Committees on Differences in Accounting and Capital Standards
  • August 20, 2010
  • Law Firm: Alston Bird LLP - Atlanta Office
  • Today, the federal banking agencies, including the OCC, Federal Reserve, FDIC and OTS issued their joint annual report to the House Financial Services Committee and the Senate Banking Committee describing the differences between the accounting and capital standards used by the agencies.  Issued pursuant to Section 37(c) of the Federal Deposit Insurance Act, the report covers differences existing as of December 31, 2009.  The report notes that since 1990, the agencies have “acted in concert to harmonize their accounting and capital standards and eliminate as many differences as possible.”  However, the report highlights the differences in capital standards that remain and notes that the agencies differ in how they apply certain aspects of their rules.

    The existing differences in capital and accounting standards used by the banking agencies fall in the following categories:

    • Restrictions on financial activities that national and state banks may engage in through financial subsidiaries;
    • Consolidation of organizations other than financial subsidiaries subordinate to parent banking organization;
    • Types and treatment of collateralized transactions;
    • Treatment of noncumulative perpetual preferred stock;
    • Treatment of equity securities of government sponsored enterprises (GSEs);
    • Limitations on subordinated debt and limited-life preferred stock;
    • Tangible capital requirement;
    • Market risk rule;
    • Treatment of pledged deposits, non-withdrawable accounts and certain certificates;
    • Treatment of assets covered by FDIC or FSLIC guarantees; and
    • Use of push-down accounting for certain regulatory reporting purposes.