Although not setting the counter-cyclical capital buffer (CCyB) by rule, the FRB is seeking comment on the framework it will use to add up to 2.5 percent in additional risk-based capital to that required of U.S. BHCs, S&LHCs, and state member banks with assets over $250 billion or those otherwise required to use the advanced version of the Basel III rules. The OCC and FDIC have not proposed a similar framework for banks under their aegis, although the FRB here says that it “expects” to impose the CCyB in concert with them. When the CCyB is invoked, covered banks could face limits on capital distributions or discretionary bonuses, with the severity of this penalty increasing as capital falls below the CCyB even if other requirements are met.

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