Capital Guidelines and Adequacy

The primary function of capital is to support the bank's operations, act as a cushion to absorb unanticipated losses and declines in asset values that could otherwise cause a bank to fail, and provide protection to uninsured depositors and debt holders in the event of liquidation. Capital regulation is particularly important because deposit insurance and other elements of the federal safety net provide banks with an incentive to increase their leverage beyond what the market--in the absence of depositor protection--would permit. The types and quantity of risk inherent in an institution's activities will determine the extent to which it may be necessary to maintain capital at levels above required regulatory minimums to properly reflect the potentially adverse consequences that these risks may have on the institution's capital.

Policy Letters

Basel Capital Accords

Advanced Approaches Risk-Based Capital Rule Examination Guidance on the Board's Public Website

Supervisory Guidance on Implementation Issues Related to the Advanced Measurement Approaches for Operational Risk

Risk Management and Capital

Federal Reserve Supervisory Assessment of Capital Planning and Positions for Large and Noncomplex Firms

Federal Reserve Supervisory Assessment of Capital Planning and Positions for LISCC Firms and Large and Complex Firms

Supervisory Concerns Related to Shareholder Protection Arrangements

Supervisory Guidance on Dodd-Frank Act Company-Run Stress Testing for Banking Organizations with Total Consolidated Assets of More Than $10 Billion but Less Than $50 Billion

Risk Transfer Considerations When Assessing Capital Adequacy – Supplemental Guidance on Consolidated Supervision Framework for Large Financial Institutions (SR letter 12-17/CA letter 12-14)

Supervisory Guidance on Stress Testing for Banking Organizations with More Than $10 Billion in Total Consolidated Assets

Guidance Regarding Prior Notices with Respect to Dividend Declarations by Savings Association Subsidiaries of Savings and Loan Holding Companies

Impact of High-Cost Credit Protection Transactions on the Assessment of Capital Adequacy

Application of the Board's Capital Adequacy Guidelines to Bank Holding Companies owned by Foreign Banking Organizations

Sound Credit Risk Management and the Use of Internal Credit Risk Ratings at Large Banking Organizations

Risk Management and Capital Adequacy of Exposures Arising from Secondary Market Credit Activities

Securitization

Covenants in Securitization Documents Linked to Supervisory Actions or Thresholds

Implicit Recourse Provided to Asset Securitizations

Risk Management and Valuation of Retained Interests Arising from Securitization Activities

Risk Management and Capital Adequacy of Exposures Arising from Secondary Market Credit Activities

Implementation of Examination Guidelines for the Review of Asset Securitization Activities

Risk Weighted Assets

Risk Transfer Considerations When Assessing Capital Adequacy – Supplemental Guidance on Consolidated Supervision Framework for Large Financial Institutions (SR letter 12-17/CA letter 12-14)

Guidance on Model Risk Management

Application of the Market Risk Rule in Bank Holding Companies and State Member Banks

Questions and Interpretations Relating to the Implementation of the Risk-Based Capital Framework

Regulatory Capital

Regulatory Capital Treatment of Certain Centrally-cleared Derivative Contracts under the Board's Capital Rule

Supervisory Guidance on the Capital Treatment of Certain Investments in Covered Funds under the Regulatory Capital Rule and the Volcker Rule

Interagency Frequently Asked Questions (FAQs) on the Regulatory Capital Rule

Tool for Calculating Capital Requirements Using the Simplified Supervisory Formula Approach

Supervisory Guidance on Implementation Issues Related to the Advanced Measurement Approaches for Operational Risk

Derivative Contracts Hedging Trust Preferred Stock

Additional Resources

Manual References

  • Bank Holding Company Supervision Manual
    • Section 2128.02, "Asset Securitization (Risk Management and Internal Controls)"
    • Section 2129.0, "Credit Derivatives (Risk Management and Internal Controls)"
    • Section 4060.3, "Consolidated Capital (Examiners’ Guidelines for Assessing the Capital Adequacy of BHCs)"
    • Section 4060.4, "Consolidated Capital (Leverage Measure)"
    • Section 4060.7, "Consolidated Capital (Assessing Capital Adequacy and Risk at Large Banking Organizations and Others with Complex Risk Profiles)"
    • Section 4060.8, "Consolidated Risk-Based Capital—Direct-Credit Substitutes Extended to ABCP Programs"
    • Section 4060.9, "Consolidated Capital Planning Processes (Payment of Dividends, Stock Redemptions, and Stock Repurchases at Bank Holding Companies)"
    • Section 4061.0, "Consolidated Capital (Capital Planning)"
  • Commercial Bank Examination Manual
    • Section 3020.1, "Assessment of Capital Adequacy"
    • Section 3030.1, "Assessing Risk-Based Capital—Direct-Credit Substitutes Extended to ABCP Programs"
    • Section 4070.1, "Dividends"
    • Section 4133.1, "Prompt Corrective Action"
Back to Top
Last Update: October 17, 2017