Compliance Bulletin

Relief and Disappointment with Basel III Final Rule
July 12, 2013

The federal banking agencies’ proposal to adopt the international bank capital standards, known as Basel III, include some troubling provisions that triggered numerous comments.

As a testament to both the efficacy and limits of the public comment process, the agencies withdrew some proposals that most worried banks—such as the inclusion of unrealized gains and losses in accumulated other comprehensive income in common equity tier 1 capital, and increased risk-weighting of residential mortgage loan exposures—but left others in, such as increased risk weights for acquisition, development, and construction loans and past due exposures. CBA’s Regulatory Compliance Bulletin focuses on the provisions of the final rule affecting real estate lending.