Purpose

Enclosed is a copy of the final low level recourse regulation published in the Federal Register by the Office of the Comptroller of the Currency. This final rule was published on April 10, 1995 (60 FR 17986), and was effective on May 10, 1995. The regulation was required by Section 350 of the Riegle Community Development and Regulatory Improvement Act of 1994, Pub. L. No. 103-325, 108 Stat. 2160, 12 U.S.C. 4808. The Office of Thrift Supervision, the Federal Reserve Board, and the Federal Deposit Insurance Corporation have issued or plan to issue similar rules.

SUMMARY

The OCC is amending its risk-based capital standards pertaining to assets transferred with recourse. The amended rule applies to recourse transactions in which an institution contractually limits its recourse exposure to less than the full effective risk-based capital requirement of the assets transferred. This amended rule now states that the required amount of risk-based capital will not exceed the maximum contractual liability of the institution under the recourse agreement.

To implement this rule, the OCC and other banking agencies have developed an interim calculation which adjusts reportable risk- weighted assets to reflect the new capital treatment. The resulting capital requirement is equal to the maximum amount of recourse exposure, less the balance of any associated recourse liability account established under generally accepted accounting practices.

For further information contact David Thede, Senior Attorney, Securities and Corporate Practices Division (202) 874-5210, or Stephen Jackson, National Bank Examiner, Office of the Chief National Bank Examiner (202) 874-5070.

Jimmy F. Barton
Chief National Bank Examiner

Related Links

• Final Rule 60 FR 17986