Patterned after an approach taken by the Basle Committee on Banking Supervision, the U.S. federal regulators are introducing for commentary a new "sliding" risk-based capital charge against revolving securitizations with early amortization provisions.
While this development is not totally surprising, the timing raised some eyebrows. Apparently the proposed rules - or at least the idea of them - are embedded in the interim guidelines on risk-based capital for ABCP conduit sponsors impacted specifically by FIN 46, the consolidation criteria written into rule in January by the Financial Accounting Standards Board. Last week, a draft of those rules, believed to be in near-final form, was circulating the market. The ruling was distributed by the Federal Deposit Insurance Corp. to other members of the Federal Financial Institutions Examination Council (FFIEC).