In this alert, we assess both an interagency and an FRB-only NPR released today following a 3-1 Board vote.  In-depth analysis of the NPRs will follow.  The proposals are already proving controversial, with Trump appointees on the Board and industry defending the tailoring approach on grounds of burden relief and consistency with congressional mandate.  Gov. Brainard – who cast the dissenting vote – has been joined by advocacy-group and Democratic protests that the NPRs go beyond congressional authority with regard to stress-testing and pose significant risks for banking organizations with assets above $250 billion.  Opponents also believe that the full burden of the advanced-approach capital rules (see FSM Report CAPITAL201) should cover banking organizations above $250 billion, especially with regard to ensuring that the AOCI filter remains to adjust capital for unrealized gains and losses.  Defenders of the NPR counter that these large-bank changes are relatively modest and, in any case, would not extend to GSIBs or entities (now including only Northern Trust) that would be considered domestic systemically-important banks.

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