Controversial risk-based capital rules proposed for financial institutions and their holding companies are unlikely to take effect by their original target date of January 1, 2013. The rulemaking, initiated by the Office of the Comptroller of the Currency, the Federal Reserve Board, and the FDIC in June 2012, was intended to implement the Basel III risk-based capital regime, as modified by the agencies to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act.

These proposed rules received significant criticism and a large volume of comment letters. More than 150 comments were submitted, including roughly three dozen letters from Capitol Hill. Some were from individual senators or congressmen; others were submitted by several senators or congressmen writing as a group.

The volume and disparity of views expressed in the comment letters, along with significant public criticism, have caused the agencies to reconsider the original implementation target date. This reconsideration may be because of criticism on the merits, or it may be because of comments specifically critical of the timing of the implementation. Depository institutions and their holding companies might become subject to these complex capital rules without having had adequate time to digest them and make operational changes necessary for compliance. 

In a joint press release dated November 9, the agencies stated that they “do not expect” that any of the proposed rules would become effective on January 1. But the release stops short of saying that the rules will be postponed. As written, the regulators’ announcement appears to leave open the possibility that at least some of the capital rules might take effect on January 1 after all.

While the press release mentions no alternative target date, the agencies have indicated that they take seriously the internationally agreed-upon timing commitments regarding implementation of Basel III and plan to work diligently to complete the rulemaking process. This suggests that industry participants can expect a revised set of proposed rules in the near future. Given the imminent holiday season, however, it seems unlikely that any such proposals will be released until sometime during the first quarter of 2013. If substantial revisions are proposed, there may well be another round of notice and comment rulemaking ahead.

The attorneys in Ballard Spahr’s Consumer Financial Services Group, Mortgage Banking Group, and Bank Regulation and Supervision Group are experienced in assisting clients in the preparation and filing of comments in agency rulemaking proceedings and counseling clients on compliance with, and the business and legal implications of, complex regulations. For more information, please contact CFS Practice Leader Alan S. Kaplinsky at 215.864.8544 or, or Keith R. Fisher in the Bank Regulation and Supervision Group at 202.661.2284 or

Copyright © 2012 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.