88616 Federal Register / Vol. 88, No. 245 / Friday, December 22, 2023 / Notices 

1Although not required under section 37(c), this 

report includes descriptions of certain of the 

Board’s capital standards applicable to depository 

institution holding companies where such 

descriptions are relevant to the discussion of capital 

standards applicable to institutions. 

2See 78 FR 62018 (October 11, 2013) (final rule 

issued by the OCC and the Board); 78 FR 55,340 

(September 10, 2013) (interim final rule issued by 

the FDIC). The FDIC later issued its final rule in 79 

FR 20,754 (April 14, 2014). The agencies’ respective 

capital rule is at 12 CFR pt. 3 (OCC), 12 CFR pt. 

217 (Board), and 12 CFR pt. 324 (FDIC). The capital 

rule applies to institutions, as well as to certain 

bank holding companies (BHCs) and savings and 

loan holding companies (SLHCs). See also 12 CFR 

217.1(c). 

3The capital rule reflects the scope of each 

agency’s regulatory jurisdiction. For example, the 

Board’s capital rule includes requirements related 

to BHCs, SLHCs, and state member banks (SMBs), 

while the FDIC’s capital rule includes provisions 

for state nonmember banks and state savings 

associations, and the OCC’s capital rule includes 

provisions for national banks and federal savings 

associations. 

4See, e.g., 84 FR 35234 (July 22, 2019). The OCC 

and FDIC revised their capital rule to conform with 

language in the Board’s capital rule related to the 

qualification criteria for additional tier 1 capital 

instruments and the definition of corporate 

exposures. As a result, these differences, which 

were included in previous reports submitted by the 

agencies pursuant to section 37(c), have been 

eliminated. 

5Certain minor differences, such as terminology 

specific to each agency for the institutions that it 

supervises, are not included in this report. 

6See 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); 12 

CFR 324.2 (FDIC). 

Federal Deposit Insurance Corporation. 

Dated at Washington, DC, on December 18, 

2023. 

James P. Sheesley, 

Assistant Executive Secretary. 

[FR Doc. 2023–28206 Filed 12–21–23; 8:45 am] 

BILLING CODE 6714–01–P 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

FEDERAL RESERVE SYSTEM 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

Joint Report to Congressional 

Committees: Differences in 

Accounting and Capital Standards 

Among the Federal Banking Agencies 

as of September 30, 2023 

AGENCY: Office of the Comptroller of the 

Currency, Treasury; Board of Governors 

of the Federal Reserve System; and 

Federal Deposit Insurance Corporation. 

ACTION: Report to Congressional 

Committees. 

SUMMARY: The Office of the Comptroller 

of the Currency (OCC), the Board of 

Governors of the Federal Reserve 

System (Board), and the Federal Deposit 

Insurance Corporation (FDIC) 

(collectively, the agencies) have 

prepared this report pursuant to section 

37(c) of the Federal Deposit Insurance 

Act. Section 37(c) requires the agencies 

to jointly submit an annual report to the 

Committee on Financial Services of the 

U.S. House of Representatives and to the 

Committee on Banking, Housing, and 

Urban Affairs of the U.S. Senate 

describing differences among the 

accounting and capital standards used 

by the agencies for insured depository 

institutions (institutions). Section 37(c) 

requires that this report be published in 

the Federal Register. The agencies have 

not identified any material differences 

among the agencies’ accounting and 

capital standards applicable to the 

institutions they regulate and supervise. 

FOR FURTHER INFORMATION CONTACT: 

OCC: Diana Wei, Risk Expert, Capital 

Policy, (202) 649–5554, Rima Kundnani, 

Counsel, Chief Counsel’s Office, (202) 

649–5490, Office of the Comptroller of 

the Currency, 400 7th Street SW, 

Washington, DC 20219. If you are deaf, 

hard of hearing, or have a speech 

disability, please dial 7–1–1 to access 

telecommunications relay services. 

Board: Andrew Willis, Manager, (202) 

912–4323, Jennifer McClean, Senior 

Financial Institution Policy Analyst II, 

(202) 785–6033, Shooka Saket, Senior 

Financial Institution Policy Analyst II, 

(202) 475–3869, Division of Supervision 

and Regulation, Mark Buresh, Senior 

Counsel (202) 452–5270 and Jasmin 

Keskinen, Senior Attorney, (202) 475– 

6650, Legal Division, Board of 

Governors of the Federal Reserve 

System, 20th Street and Constitution 

Avenue NW, Washington, DC 20551. 

For users of Telecommunications 

Device for the Deaf (TDD) and TTY– 

TRS, please call 711 from any 

telephone, anywhere in the United 

States. 

FDIC: Benedetto Bosco, Chief, Capital 

Policy Section, (703) 245–0778, 

Christine Bouvier, Assistant Chief 

Accountant, (202) 898–7289, Richard 

Smith, Capital Policy Analyst, Capital 

Policy Section, (703) 254–0782, Division 

of Risk Management Supervision, 

Amber Beck, Senior Attorney, (202) 

898–3772, Legal Division, Federal 

Deposit Insurance Corporation, 550 17th 

Street NW, Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: The text of 

the report follows: 

Report to the Committee on Financial 

Services of the U.S. House of 

Representatives and to the Committee 

on Banking, Housing, and Urban 

Affairs of the U.S. Senate Regarding 

Differences in Accounting and Capital 

Standards among the Federal Banking 

Agencies 

Introduction 

In accordance with section 37(c), the 

agencies are submitting this joint report, 

which covers differences among their 

accounting and capital standards 

existing as of September 30, 2023, 

applicable to institutions.1 In recent 

years, the agencies have acted together 

to harmonize their accounting and 

capital standards and eliminate as many 

differences as possible. As of September 

30, 2023, the agencies have not 

identified any material differences 

among the agencies’ accounting 

standards applicable to institutions. 

In 2013, the agencies revised the riskbased and leverage capital rule for 

institutions (capital rule),2 which 

harmonized the agencies’ capital rule in 

a comprehensive manner.3 Since 2013, 

the agencies have revised the capital 

rule on several occasions, further 

reducing the number of differences in 

the agencies’ capital rule.4 Today, only 

a few differences remain, which are 

statutorily mandated for certain 

categories of institutions or which 

reflect certain technical, generally 

nonmaterial differences among the 

agencies’ capital rule. No new material 

differences were identified in the capital 

standards applicable to institutions in 

this report compared to the previous 

report submitted by the agencies 

pursuant to section 37(c). 

Differences in the Standards Among the 

Federal Banking Agencies 

Differences in Accounting Standards 

As of September 30, 2023, the 

agencies have not identified any 

material differences among themselves 

in the accounting standards applicable 

to institutions. 

Differences in Capital Standards 

The following are the remaining 

technical differences among the capital 

standards of the agencies’ capital rule.5

Definitions 

The agencies’ capital rule largely 

contains the same definitions.6 The 

differences that exist generally serve to 

accommodate the different needs of the 

institutions that each agency charters, 

regulates, and/or supervises. 

The agencies’ capital rule has 

differing definitions of a pre-sold 

construction loan. The capital rule of all 

three agencies provides that a pre-sold 

construction loan means any ‘‘one-tofour family residential construction loan 

to a builder that meets the requirements 

of section 618(a)(1) or (2) of the 


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Federal Register / Vol. 88, No. 245 / Friday, December 22, 2023 / Notices 88617 

7 12 CFR 3.2 (OCC); 12 CFR 217.2 (Board); 12 CFR 

324.2 (FDIC). 

8 12 CFR 217.2. 

9 12 CFR 217.20(b)(1)(v) and 217.20(c)(1)(viii) 

(Board). 

10 12 CFR 217.20(b)(1)(v) and 217.20(c)(1)(viii) 

(Board); 12 CFR 324.20(b)(1)(v) and 

324.20(c)(1)(viii) (FDIC). Although not referenced in 

the capital rule, the OCC has similar restrictions on 

dividends; 12 CFR 5.55 and 12 CFR 5.63. Certain 

restrictions on the payment of dividends that apply 

under separate regulations, and therefore not 

discussed in this report, are different among the 

agencies. Compare 12 CFR 208.5 (Board) and 12 

CFR 5.64 (OCC) with 12 CFR 303.241 (FDIC). 

11Board-regulated institution refers to an SMB, a 

BHC, or an SLHC. See 12. CFR 217.2. 

12 12 CFR 217.20(f); see also 12 CFR 

217.20(b)(1)(iii). 

13See 12 CFR 5.46, 5.47, 5.55, and 5.56 (OCC); 

12 CFR 208.5 (Board); 12 CFR 303.241 (FDIC). 

14 12 CFR 324.22(a)(9). 

15 12 U.S.C. 1464(t)(5). 

16Subsidiaries engaged in activities not 

permissible for national banks are considered nonincludable subsidiaries. 

17A deduction from capital is only required to the 

extent that the savings association’s investment 

exceeds the generally applicable thresholds for 

deduction of investments in the capital of an 

unconsolidated financial institution. 

Resolution Trust Corporation 

Refinancing, Restructuring, and 

Improvement Act of 1991 (12 U.S.C. 

1831n), and, in addition to other 

criteria, the purchaser has not 

terminated the contract.’’ 7 The Board’s 

definition provides further clarification 

that, if a purchaser has terminated the 

contract, the institution must 

immediately apply a 100 percent risk 

weight to the loan and report the revised 

risk weight in the next quarterly 

Consolidated Reports of Condition and 

Income (Call Report).8 Similarly, if the 

purchaser has terminated the contract, 

the OCC and FDIC capital rule would 

immediately disqualify the loan from 

receiving a 50 percent risk weight, and 

would apply a 100 percent risk weight 

to the loan. The change in risk weight 

would be reflected in the next quarterly 

Call Report. Thus, the minor wording 

difference between the agencies should 

have no practical consequence. 

Capital Components and Eligibility 

Criteria for Regulatory Capital 

Instruments 

While the capital rule generally 

provides uniform eligibility criteria for 

regulatory capital instruments, there are 

some textual differences among the 

agencies’ capital rule. The capital rule of 

each of the three agencies requires that, 

for an instrument to qualify as common 

equity tier 1 or additional tier 1 capital, 

cash dividend payments be paid out of 

net income and retained earnings, but 

the Board’s capital rule also allows cash 

dividend payments to be paid out of 

related surplus.9 The provision in the 

Board’s capital rule that allows 

dividends to be paid out of related 

surplus is a difference in substance 

among the agencies’ capital rule. 

However, due to the restrictions on 

institutions regulated by the Board in 

separate regulations, this additional 

language in the Board’s rule has a 

practical impact only on bank holding 

companies (BHCs) and savings and loan 

holding companies (SLHCs) and is not 

a difference as applied to institutions. 

The agencies apply the criteria for 

determining eligibility of regulatory 

capital instruments in a manner that 

ensures consistent outcomes for 

institutions. 

Both the Board’s capital rule and the 

FDIC’s capital rule also include an 

additional sentence noting that 

institutions regulated by each agency 

are subject to restrictions independent 

of the capital rule on paying dividends 

out of surplus and/or that would result 

in a reduction of capital stock.10 These 

additional sentences do not create 

differences in substance between the 

agencies’ capital standards, but rather 

note that restrictions apply under 

separate regulations. 

In addition, the Board’s capital rule 

includes a requirement that a Boardregulated institution 11 must obtain 

prior approval before redeeming 

regulatory capital instruments.12 This 

requirement effectively applies only to a 

BHC or an SLHC and is, therefore, not 

included in the OCC’s and FDIC’s 

capital rule. All three agencies require 

institutions to obtain prior approval 

before redeeming regulatory capital 

instruments in other regulations.13 The 

additional provision in the Board’s 

capital rule, therefore, only has a 

practical impact on BHCs and SLHCs 

and is not a difference as applied to 

institutions. 

Capital Deductions 

There is a technical difference 

between the FDIC’s capital rule and the 

OCC’s and Board’s capital rule with 

regard to an explicit requirement for 

deduction of examiner-identified losses. 

The agencies require their examiners to 

determine whether their respective 

supervised institutions have 

appropriately identified losses. The 

FDIC’s capital rule, however, explicitly 

requires FDIC-supervised institutions to 

deduct identified losses from common 

equity tier 1 capital elements, to the 

extent that the institutions’ common 

equity tier 1 capital would have been 

reduced if the appropriate accounting 

entries had been recorded.14 Generally, 

identified losses are those items that an 

examiner determines to be chargeable 

against income, capital, or general 

valuation allowances. 

For example, identified losses may 

include, among other items, assets 

classified as loss, off-balance-sheet 

items classified as loss, any expenses 

that are necessary for the institution to 

record in order to replenish its general 

valuation allowances to an adequate 

level, and estimated losses on 

contingent liabilities. The Board and the 

OCC expect their supervised institutions 

to promptly recognize examineridentified losses, but the requirement is 

not explicit under their capital rule. 

Instead, the Board and the OCC apply 

their supervisory authorities to ensure 

that their supervised institutions charge 

off any identified losses. 

Subsidiaries of Savings Associations 

There are special statutory 

requirements for the agencies’ capital 

treatment of a savings association’s 

investment in or credit to its 

subsidiaries as compared with the 

capital treatment of such transactions 

between other types of institutions and 

their subsidiaries. Specifically, the 

Home Owners’ Loan Act (HOLA) 

distinguishes between subsidiaries of 

savings associations engaged in 

activities that are permissible for 

national banks and those engaged in 

activities that are not permissible for 

national banks.15

When subsidiaries of a savings 

association are engaged in activities that 

are not permissible for national banks,16

the parent savings association generally 

must deduct the parent’s investment in 

and extensions of credit to these 

subsidiaries from the capital of the 

parent savings association. If a 

subsidiary of a savings association 

engages solely in activities permissible 

for national banks, no deduction is 

required, and investments in and loans 

to that organization may be assigned the 

risk weight appropriate for the 

activity.17 As the appropriate federal 

banking agencies for federal and state 

savings associations, respectively, the 

OCC and the FDIC apply this capital 

treatment to those types of institutions. 

The Board’s regulatory capital 

framework does not apply to savings 

associations and, therefore, does not 

include this requirement. 

Tangible Capital Requirement 

Federal law subjects savings 

associations to a specific tangible capital 

requirement but does not similarly do so 

with respect to banks. Under section 

5(t)(2)(B) of HOLA, savings associations 

are required to maintain tangible capital 

in an amount not less than 1.5 percent 


ddrumheller on DSK120RN23PROD with NOTICES1
88618 Federal Register / Vol. 88, No. 245 / Friday, December 22, 2023 / Notices 

18 12 U.S.C. 1464(t)(1)(A)(ii) and (t)(2)(B). 

19 12 CFR 3.10(a)(6) (OCC); 12 CFR 

324.10(a)(1)(vi) (FDIC). The Board’s regulatory 

capital framework does not apply to savings 

associations and, therefore, does not include this 

requirement. 

20See 12 U.S.C. 1831o(c)(3); see also 12 CFR 6.4 

(OCC); 12 CFR 208.45 (Board); 12 CFR 324.403 

(FDIC). 

21 12 U.S.C. 1831o(h)(3)(A). 

22See 79 FR 24,528 (May 1, 2014). 

23 12 CFR 6.4(b)(1)(i)(D)(2) (OCC); 12 CFR 

208.43(b)(1)(i)(D)(2) (Board); 12 CFR 

324.403(b)(1)(ii) (FDIC). 

24 12 CFR 208.43(b)(1)(i)(D)(2) (Board); 12 CFR 

324.403(b)(1)(ii) (FDIC). 25 12 CFR 6.4(b)(1)(i)(D)(2) (OCC). 

of total assets.18 The capital rule of the 

OCC and the FDIC includes a 

requirement that savings associations 

maintain a tangible capital ratio of 1.5 

percent.19 This statutory requirement 

does not apply to banks and, thus, there 

is no comparable regulatory provision 

for banks. The distinction is of little 

practical consequence, however, 

because under the Prompt Corrective 

Action (PCA) framework, all institutions 

are considered critically 

undercapitalized if their tangible equity 

falls below 2 percent of total assets.20

Generally speaking, the appropriate 

federal banking agency must appoint a 

receiver within 90 days after an 

institution becomes critically 

undercapitalized.21

Enhanced Supplementary Leverage 

Ratio 

The agencies adopted enhanced 

supplementary leverage ratio standards 

that took effect beginning on January 1, 

2018.22 These standards require certain 

BHCs to exceed a 5 percent 

supplementary leverage ratio to avoid 

limitations on distributions and certain 

discretionary bonus payments and also 

require the subsidiary institutions of 

these BHCs to meet a 6 percent 

supplementary leverage ratio to be 

considered ‘‘well capitalized’’ under the 

PCA framework.23 The rule text 

establishing the scope of application for 

the enhanced supplementary leverage 

ratio differs among the agencies. The 

Board and the FDIC apply the enhanced 

supplementary leverage ratio standards 

for institutions based on parent BHCs 

being identified as global systemically 

important BHCs as defined in 12 CFR 

217.2.24 The OCC applies enhanced 

supplementary leverage ratio standards 

to the institution subsidiaries under 

their supervisory jurisdiction of a toptier BHC that has more than $700 billion 

in total assets or more than $10 trillion 

in assets under custody.25

Michael J. Hsu, 

Acting Comptroller of the Currency, Board 

of Governors of the Federal Reserve System. 

Ann E. Misback, 

Secretary of the Board, Federal Deposit 

Insurance Corporation. 

Dated at Washington, DC, on October 10, 

2023. 

James P. Sheesley, 

Assistant Executive Secretary. 

[FR Doc. 2023–28173 Filed 12–21–23; 8:45 am] 

BILLING CODE 6210–01–P; 6714–01–P; 4810–33–P 

FINANCIAL STABILITY OVERSIGHT 

COUNCIL 

Agency Information Collection 

Activities; Continuing Collections; 

Comment Request; Designation of 

Financial Market Utilities 

AGENCY: Financial Stability Oversight 

Council. 

ACTION: Notice and request for 

comments. 

SUMMARY: The Financial Stability 

Oversight Council (the ‘‘Council’’), as 

part of its continuing effort to reduce 

paperwork and respondent burden, 

invites members of the public and 

affected agencies to comment on the 

continuing information collections 

listed below, as required by the 

Paperwork Reduction Act of 1995. The 

Council is soliciting comments 

concerning its collection of information 

related to its authority to designate 

financial market utilities as systemically 

important. Section 804 of the DoddFrank Wall Street Reform and Consumer 

Protection Act (the ‘‘Dodd-Frank Act’’) 

provides the Council the authority to 

designate a financial market utility 

(‘‘FMU’’) that the Council determines is 

or is likely to become systemically 

important because the failure of or a 

disruption to the functioning of the 

FMU could create, or increase, the risk 

of significant liquidity or credit 

problems spreading among financial 

institutions or markets and thereby 

threaten the stability of the United 

States financial system. 

DATES: Written comments must be 

received on or before February 20, 2024. 

ADDRESSES: Interested persons are 

invited to submit comments regarding 

this proposed collection according to 

the instructions below. All submissions 

must refer to the document title and 

docket number FSOC–2023–0003. 

Electronic submission of comments. 

Interested persons may submit 

comments electronically through the 

Federal eRulemaking Portal at http://

www.regulations.gov. Electronic 

submission of comments allows the 

commenter maximum time to prepare 

and submit a comment, ensures timely 

receipt, and enables the Council to make 

them available to the public. Comments 

submitted electronically through the 

http://www.regulations.gov website can 

be viewed by other commenters and 

interested members of the public. 

Commenters should follow the 

instructions provided on that site to 

submit comments electronically. 

Mail. Send comments to Financial 

Stability Oversight Council, 1500 

Pennsylvania Avenue NW, Washington, 

DC 20220. 

Public inspection of comments. All 

properly submitted comments will be 

available for inspection and 

downloading at http://

www.regulations.gov. 

Additional instructions. In general, 

comments received, including 

attachments and other supporting 

materials, are part of the public record 

and are available to the public. Do not 

submit any information in your 

comment or supporting materials that 

you consider confidential or 

inappropriate for public disclosure. 

FOR FURTHER INFORMATION CONTACT: 

Samantha MacInnis, Director of 

Operations, Financial Stability 

Oversight Council, U.S. Treasury 

Department, (202) 622–2354, 

Samantha.MacInnis@treasury.gov; Mark 

Schlegel, Senior Counsel, U.S. Treasury 

Department, (202) 622–1027, 

Mark.Schlegel@treasury.gov. 

SUPPLEMENTARY INFORMATION: 

Title: Designation of Financial Market 

Utilities. 

OMB Control Number: 1505–0239. 

Type of Review: Extension without 

change of a currently approved 

collection. 

Description: On July 27, 2011, the 

Council published in the Federal 

Register a final rule (12 CFR part 1320) 

that describes the criteria that will 

inform the Council’s designation of 

FMUs as systemically important under 

the Dodd-Frank Act and the processes 

and procedures established under the 

Dodd-Frank Act for any such 

designation. On July 18, 2012, the 

Council designated eight FMUs as 

systemically important under title VIII 

of the Dodd-Frank Act. 

The collection of information under 

12 CFR 1320.11 affords FMUs that are 

under consideration for designation, or 

rescission of designation, an 


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