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Summary:
Highlights

GAO reviewed the Department of the Treasury, Office of the Comptroller of the Currency; Federal Reserve System; Federal Deposit Insurance Corporation's (the agencies) new rule on the Regulatory Capital Rule: simplifications to the capital rule pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996. GAO found that the final rule (1) simplifies certain aspects of the capital rule, which was issued by the agencies in 2013; (2) is responsive to the agencies' March 2017 report to Congress pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996, in which the agencies committed to meaningfully reduce regulatory burden, especially on community banking organizations; (3) applies solely to banking organizations that are not subject to the advanced approaches capital rule (non-advanced approaches banking organizations); (4) states that non-advanced approaches banking organizations will be subject to simpler regulatory capital requirements for mortgage servicing assets, certain deferred tax assets arising from temporary differences, and investments in the capital of unconsolidated financial institutions than those currently applied; (5) simplifies, for non-advanced approaches banking organizations, the calculation for the amount of capital issued by a consolidated subsidiary of a banking organization and held by third parties (sometimes referred to as a minority interest) that is includable in regulatory capital; and (6) makes technical amendments to, and clarifies certain aspects of, the agencies' capital rule for both non-advanced approaches banking organizations and advanced approaches banking organizations (technical amendments).





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B-331261
August 5, 2019
The Honorable Mike Crapo
Chairman
The Honorable Sherrod Brown
Ranking Member
Committee on Banking, Housing, and Urban Affairs
United States Senate
The Honorable Maxine Waters
Chairwoman
The Honorable Patrick McHenry
Ranking Member
Committee on Financial Services
House of Representatives
Subject: Department of the Treasury,
Office of the Comptroller of the Currency; Federal Reserve System; Federal Deposit
Insurance Corporation: Regulatory Capital Rule: Simplifications to the Capital Rule
Pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996
Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a
major rule promulgated by the Department of the Treasury, Office of the Comptroller of the
Currency; Federal Reserve System; Federal Deposit Insurance Corporation (the agencies)
entitled ?Regulatory Capital Rule: Simplifications to the Capital Rule Pursuant to the
Economic Growth and Regulatory Paperwork Reduction Act of 1996? (RINs: 1557-AE10; 7100
AE74; 3064-AE59).  We received the rule from Treasury on July 24, 2019.  It was
published in the Federal Register as a final rule on July 22, 2019.  84 Fed.
Reg. 35234.  The effective date of the rule is generally October 1, 2019, with
some amendments effective April 1, 2020.
According to the agencies, the final rule simplifies certain aspects of the capital
rule, which was issued by the agencies in 2013.  78 Fed. Reg. 62018, 78 Fed. Reg.
55340.  The agencies state that the final rule is responsive to the agencies? March
2017 report to Congress pursuant to the Economic Growth and Regulatory Paperwork Reduction
Act of 1996, in which the agencies committed to meaningfully reduce regulatory burden,
especially on community banking organizations.  The key elements of the final rule,
according to the agencies, apply solely to banking organizations that are not subject to
the advanced approaches capital rule (non-advanced approaches banking organizations). 
The agencies state that, under the final rule, non-advanced approaches banking
organizations will be subject to simpler regulatory capital requirements for mortgage
servicing assets, certain deferred tax assets arising from temporary differences, and
investments in the capital of unconsolidated financial institutions than those currently
applied.  The agencies further state that the final rule also simplifies, for
non-advanced approaches banking organizations, the calculation for the amount of capital
issued by a consolidated subsidiary of a banking organization and held by third parties
(sometimes referred to as a minority interest) that is includable in regulatory
capital.  In addition, the agencies state that the final rule makes technical
amendments to, and clarifies certain aspects of, the agencies? capital rule for both
non-advanced approaches banking organizations and advanced approaches banking organizations
(technical amendments).  Finally, the agencies state that revisions to the definition
of high-volatility commercial real estate exposure in the agencies? capital rule are being
addressed in a separate rulemaking. 
Enclosed is our assessment of the agencies? compliance with the procedural steps
required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. 
If you have any questions about this report or wish to contact GAO officials responsible
for the evaluation work relating to the subject matter of the rule, please contact Janet
Temko-Blinder, Assistant General Counsel, at (202) 512-7104.
  signed
Shirley A. Jones
Managing Associate General Counsel
Enclosure
cc: Shaquita Merritt
Program Specialist, Chief Counsel?s Office
Department of the TreasuryENCLOSURE
REPORT UNDER 5 U.S.C. § 801(a)(2)(A) ON A
MAJOR RULE
ISSUED BY THE
Department of the Treasury,
Office of the Comptroller of the Currency;
Federal Reserve System;
Federal Deposit Insurance Corporation ENTITLED
?Regulatory Capital Rule: Simplifications to the
Capital Rule Pursuant to the Economic Growth and
Regulatory Paperwork Reduction Act of 1996? (RINs: 1557-AE10; 7100 AE74;
3064-AE59) 
(i) Cost-benefit analysis
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) did not prepare an analysis of costs and benefits of the final
rule.
(ii) Agency actions relevant to the Regulatory Flexibility Act (RFA), 5 U.S.C. §§
603-605, 607, and 609
OCC certified that the final rule will not have a significant impact on a substantial
number of OCC-supervised small entities.  Also, the Board determined, and FDIC
certified, that the final rule will not have a significant impact on a substantial number
of small entities.
(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act
of 1995, 2 U.S.C. §§ 1532-1535
OCC determined that this final rule will not have an effect on the state, local, or
tribal government, in the aggregate, or on the private sector, of $100 million or more in
any one year (adjusted for inflation).  As independent regulatory agencies, the
agencies are not subject to the Act. 
(iv) Other relevant information or requirements under acts and executive
orders
Administrative Procedure Act, 5 U.S.C. §§ 551et seq.
On October 27, 2017, the agencies published a notice of proposed rulemaking.  82
Fed. Reg. 49984.  Collectively, the agencies received nearly 100 comment letters from
banking organizations, trade associations, public interest groups, and individuals. 
The agencies responded to comments in the final rule. 
Paperwork Reduction Act (PRA), 44 U.S.C. §§ 3501-3520
The agencies determined that this final rule contains information collection
requirements under the Act.  The information collection requirements contained in this
final rule were submitted by OCC and FDIC to the Office of Management and Budget
(OMB).  As stated in the final rule, the Board reviewed the proposed rule under the
authority delegated to the Board by OMB.  The title of the proposed information
collection is Recordkeeping and Disclosure Requirements Associated with Capital Adequacy,
and for the OCC the OMB control number is 1557-0318 (66,081 estimated annual burden hours),
for the Board the OMB control number is 7100-0313 (79,727 estimated annual burden hours),
and for the FDIC the OMB control number is 3064-0153 (127,840 estimated annual burden
hours). 
The agencies also state that the final rule will require changes to the Consolidated
Reports of Condition and Income (Call Reports) (OMB Nos. 1557-0081, 7100-0036, and
3064-0052), Consolidated Financial Statements for Holding Companies (OMB No. 7100-0128),
and Capital Assessments and Stress Testing (OMB No. 7100-0341), which will be addressed in
a separate Federal Register notice.
Statutory authorization for the rule
The agencies promulgated this final rule pursuant to various sections of title 12 of the
U.S. Code.
Executive Order No. 12,866 (Regulatory Planning and Review)
As independent regulatory agencies, the agencies are not subject to the Order.
Executive Order No. 13,132 (Federalism)
As independent regulatory agencies, the agencies are not subject to the Order.




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