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Wednesday, March 21, 2012

FDIC Issues Proposed Revised Definitions for Subprime, Leveraged Loan Reporting

The FDIC Board yesterday issued a proposal containing long-awaited revised definitions of subprime consumer loans and leveraged commercial loans for banks with more than $10 billion in assets that are subject to the large-bank pricing rule.

ABA, which has developed a summary of the proposal, believes that the revised definitions would be much better proxies of risk than the original definitions, and reporting would be less onerous. The proposal also would alter the timing on when banks would have to classify loans as higher-risk, and it would grandfather the classification of higher-risk securitizations.

The association persuaded the FDIC to reconsider the definitions, and also allow affected banks to use long-standing, existing supervisory definitions until Oct. 1. Meanwhile, ABA organized a banker group to work with FDIC staff members to develop more-workable definitions. There will be a 60-day comment period on the proposal following its publication in the Federal Register.

Read the ABA summary.
Read the proposal.
Read the FDIC staff memorandum on the proposal.

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PamelaDominguez said...
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