Study required

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (hereinafter, the Federal banking agencies) shall conduct the study and issue the report to Congress required by section 3, prior to issuing any final rule amending the agencies’ general risk-based capital requirements for— (1)determining risk-weighted assets as proposed in the Standardized Approach for Risk Weighted Assets Notice of Proposed Rulemaking issued in June 2012 (hereinafter, the Standardized Approach NPR); (2)determining risk-weighted assets as proposed in the Advanced Approaches Risk-based Capital Rule; Market Risk Capital Rule Notice of Proposed Rulemaking issued in June 2012 (hereinafter, the Advanced Approach NPR); and (3)determining minimum regulatory capital ratios as proposed in the Regulatory Capital, Implementation of Basel III, Minimum Regulatory Capital Ratios, Capital Adequacy, Transition Provisions, and Prompt Corrective Action Notice of Proposed Rulemaking issued in June 2012 (hereinafter, the Basel III NPR).

Study and report

(a)

Study

(1)

In general

The Federal banking agencies shall, jointly, conduct a study of the impact of the Standardized Approach NPR and the Advanced Approach NPR, respectively, on the minimum regulatory capital requirements of insured depository institutions and insured depository institution holding companies. As part of this study, the Federal banking agencies shall separately identify the various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and of amendments made by that Act, that affect capital quality, capital levels, asset quality, and the risk management activities of insured depository institutions and insured depository holding companies (hereinafter identified provisions) and take into consideration the impact of such provisions. Without excluding any provisions the Federal banking agencies identify as affecting capital quality, capital levels, asset quality, and the risk management activities of insured depository institutions and insured depository holding companies, the identified provisions shall include the following provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the amendments made by such provisions of such Act: (A)Section 115 (regarding enhanced supervision and prudential standards). (B)Section 165 (regarding enhanced supervision and prudential standards). (C)Section 166 (regarding early remediation requirements). (D)Section 171 (regarding leverage and risk-based capital requirements). (E)Section 619 (regarding prohibitions on proprietary trading and certain relationships with hedge funds and private equity funds). (F)Section 939 (regarding the removal of statutory references to credit ratings). (G)Section 941 (regarding regulation of credit risk retention and exemption of qualified residential mortgages). (H)Section 1412 (regarding safe harbor and rebuttable presumptions for qualified mortgages). (2)

Contents of study

In conducting the study required in paragraph (1), the Federal banking agencies shall determine and make projections of the likely cumulative impact of the Standardized Approach NPR, the Advanced Approach NPR, the Basel III NPR, and the identified provisions on required regulatory capital levels, capital quality, asset quality, and risk management at covered financial institutions. Based on these findings, the Federal banking agencies shall provide an assessment regarding— (A)changes to required capital levels; (B)the aggregate increase or decrease of total risk-weighted asset levels for the institutions to which the Standardized Approach NPR or Advanced Approach NPR would be applicable based on current assets; (C)whether the NPRs and identified provisions will cause capital levels at covered institutions to fluctuate with more frequency or by greater amounts than the current rules and indicate what, if any, safety and soundness issues such fluctuations raise for financial institutions or the financial system; (D)whether the NPRs and the identified provisions will result in the discontinuation of the use of certain risk management tools by covered financial institutions and the impact on the safety and soundness of financial institutions and the financial system; (E)the impact the NPRs and the identified provisions will have on residential mortgage lending and home equity lines of credit; (F)the likely cumulative impact of the NPRs and the identified provisions will have on the availability of credit, generally and in low- and moderate-income areas; (G)the variance in required capital levels, assets, and asset quality between institutions that implement the advanced approaches or approaches to risk weighting of assets and those that use the Standardized Approach NPR or the Advanced Approach NPR and the impact on competition between entities using different approaches; and (H)historical probability of default and loss given default of residential mortgage loans and the proposed risk weightings in the Standardized Approach NPR and the Advanced Approach NPR, and whether such proposed risk weightings are appropriately and fairly calibrated. (3)

Voluntary participation

The Federal banking agencies may seek input and participation from insured depository institutions and insured depository institution holding companies, however, participation in the study by insured depository institutions and insured depository institution holding companies shall be voluntary. (b)

Report

(1)

In general

The Federal banking agencies shall issue a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results of the study required by subsection (a). (2)

Contents

The Federal banking agencies shall include the methodologies and assumptions used in the study as well as the required elements of the study listed in subsection (a) in the report required in this subsection.