The Office of the Comptroller of the Currency (OCC) approved a final rule implementing the advanced approaches of the Basel II Capital Accord. This rule establishes regulatory and supervisory expectations for credit risk, through the Internal Ratings Based Approach (IRB), and operational risk, through the Advanced Measurement Approach (AMA), and articulates enhanced standards for the supervisory review of capital adequacy and public disclosures for the largest U.S. banks.
“Our current risk-based capital rules are simply inadequate in addressing the complex risks inherent in our largest institutions”, said Comptroller of the Currency John C. Dugan. However, several important changes were made to the proposal.
“While the advanced approaches rule is now fundamentally consistent in most respects with the Basel II Framework that is already being implemented internationally, we retained several safeguards unique to the U.S. supervisory process”, Dugan said.
The US Treasury welcomed the decision.
Press release
Basel II Preamble
Basel II Final Rule
US Treasury Statement
© Graham Bishop
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