The federal banking regulators last week announced that they have extended the comment period until October 22, 2012, on three notices of proposed rulemaking (NPRs) that would revise and replace the agencies' current capital rules. The proposals have been available on the Federal Deposit Insurance Corporation's website since June 12, 2012.

One NPR, the Basel III regulatory capital reforms, would strengthen minimum requirements for the level and quality of financial institutions' capital. The second NPR proposes changes to the agencies' Advanced Approaches capital regulation to reflect other aspects of Basel III and would apply the agencies' Market Risk capital regulations to thrift institutions and thrift holding companies. A third NPR, the Standardized Approach, proposes changes to the calculation of risk-weighted assets that address issues identified in the financial crisis, and removes reliance on credit ratings consistent with the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The comment period was extended to allow interested persons more time to understand, evaluate, and prepare comments on the proposals. Originally, comments were due by September 7, 2012: http://www.fdic.gov/news/news/press/2012/pr12068.html  

IBANYS CFO Council Members are Encouraged to Respond to the Proposed Accounting Standards Update Related to New Liquidity Risk and Interest Rate Risk Disclosures

In June 2012, the Financial Accounting Standards Board (FASB) issued for public comment a Proposed Accounting Standards Update (ASU) intended to provide information about the risk that a reporting organization will encounter difficulty when meeting its financial obligations and about the exposure of a financial institution's financial assets and liabilities to fluctuations in market interest rates. The proposed provisions apply to both public and private financial institutions.

The proposal represents a meaningful increase in both quantitative and qualitative disclosure requirements for financial institutions. Liquidity risk disclosures would include: a table of available liquid funds (unencumbered cash, high-quality liquid assets and borrowing availability); a tabular disclosure of liquidity gap maturity analysis (of financial assets and liabilities including off-balance-sheet financial commitments and obligations); and a table or list of the issuance of time deposit liabilities, including cost of funding. Interest-rate risk disclosures would include: a repricing gap analysis by class of financial asset and liability segregated by time interval based on contractual repricing and an interest rate sensitivity analysis demonstrating the effects of specified hypothetical shifts of interest-rate curves on net income and equity. Quantitative disclosures would be accompanied by narrative disclosures about significant changes related to timing or amounts and how the entity managed those changes during the period.

Given the significant impact of these proposed disclosure requirements on financial institutions, IBANYS CFO Council Members are encouraged to respond to this ASU prior to the conclusion of the comment period (September 25, 2012). In an effort to reduce the time incurred associated with preparing a written comment letter to the FASB, Jamie L. Keiser, CPA from The Bonadio Group has agreed to prepare a draft form letter for CFO Council Members' use and consideration. A draft of that letter will be distributed to CFO Council Members by September 1st. A brief working session on the letter and its contents will be conducted at the Annual Convention. For those not in attendance at the Convention,  comments can be sent directly to Jamie at jkeiser@bonadio.com . A final draft of the letter will be distributed to CFO Council Members no later than September 17th in order to meet the FASB's September 25th deadline.

Link to FASB Exposure Draft: http://www.fasb.org/cs/BlobServer?blobkey=id&blobwhere=1175824112049&blobheader=application%2Fpdf&blobcol=urldata&blobtable=MungoBlobs