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Board of Governors of the Federal Reserve System
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Board of Governors of the Federal Reserve System

Supervision and Regulation Letters

SR 10-4

Clarification of the Risk Weight for Claims on or Guaranteed by the Federal Deposit Insurance Corporation (FDIC)

February 26, 2010

Seal of the Board of Governors of the Federal Reserve System
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.  20551
DIVISION OF BANKING
SUPERVISION AND REGULATION
SR 10-4
February 26, 2010
TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK AND TO BANKING ORGANIZATIONS SUPERVISED BY THE FEDERAL RESERVE
SUBJECT:   Clarification of the Risk Weight for Claims on or Guaranteed by the Federal Deposit Insurance Corporation (FDIC)

The Federal Reserve, along with the other federal banking agencies, has adopted the attached statement, Clarification of the Risk Weight for Claims on or Guaranteed by the FDIC, in response to recent questions.

Amongst other things, the statement clarifies that loss-sharing agreements recently entered into by the FDIC with acquirers of assets from failed institutions are considered conditional guarantees for risk-based capital purposes. Because the specific structural arrangements for these agreements vary, the statement recommends that a banking organization consult with its primary federal regulator to determine the appropriate risk-based capital treatment for a specific loss-sharing agreement.

Questions regarding the attached statement and all inquiries concerning the risk-based capital treatment of FDIC loss-sharing agreements for banking organizations supervised by the Federal Reserve should be directed to Andrew Willis, Financial Analyst, Supervisory Policy and Guidance, at (202) 736-5635; or Chris Powell, Financial Analyst, Supervisory Policy and Guidance, at (202) 912-4353. In addition, questions may be sent via the Board’s public website.1

signed by
Jon D. Greenlee
Acting Director
Last update:  February 1, 2011