Regulatory Alerts2021-01-06 | 2020-27046Regulatory Capital Treatment for Investments in Certain Unsecured Debt Instruments of U.S. and Foreign GSIBs; Total Loss-Absorbing Capacity Requirements
The OCC, Federal Reserve Board, and FDIC issued a final rule requiring advanced approaches banking organizations to deduct certain investments in unsecured debt instruments from their regulatory capital. The mandate targets covered debt instruments issued by U.S. and foreign global systemically important banking organizations that are used to meet total loss-absorbing capacity and long-term debt requirements. By imposing these capital deductions, the agencies aim to reduce financial system interconnectedness and systemic risk while clarifying existing TLAC rules for covered banking organizations.
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