Regulatory Alerts2020-03-20 | 2020-06051Regulatory Capital Rule: Eligible Retained Income
The Federal Reserve, OCC, and FDIC issued an interim final rule revising the definition of eligible retained income for U.S. banking organizations to mitigate sudden capital distribution restrictions during economic stress. By calculating eligible retained income as the greater of four-quarter net income or its average, the rule allows banks to maintain more gradual capital buffers and continue lending amid COVID-19 market disruptions. This adjustment prevents abrupt dividend and bonus payment limits, thereby supporting financial intermediation and stabilizing capital flows across the banking sector.
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