Basel IA
The federal banking agencies have finalized a notice of proposed rulemaking (NPR) to rewrite the risk-based capital rules that all but the biggest U.S. banks could select. The NPR would widen the spectrum of risk-weights that would determine risk-based capital (RBC), providing for a significant drop in RBC for certain low-risk assets (e.g., mortgages backed by private mortgage insurance). Conversely, risk-weights would rise for high-risk assets (e.g., low-rated corporate debt), but the maximum risk-weight is considerably lower than initially proposed.