OCC Approves Basel II Capital Rule

The Office of the Comptroller of the Currency announced yesterday it has 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.

“The rule we approved today is a critical component of the U.S. banking agencies’ plans to update and enhance our regulatory capital program,” said Comptroller of the Currency John C. Dugan. “Our current risk-based capital rules are simply inadequate in addressing the complex risks inherent in our largest institutions. The IRB and AMA rules establish capital requirements and risk management expectations aligned much more closely to the risks assumed by these institutions.”