Cheat Sheet: Key Requirements of the Brown-Vitter TBTF Bill
April 24, 2013 1:34 PM
Sens. David Vitter, R-La., and Sherrod Brown, D-Ohio, officially unveiled their bill to rein in the large banks on Wednesday, making several critical changes from a draft obtained by the media earlier this month. Following are the key elements of the Terminating Bailouts for Taxpayer Fairness Act. (Image: Bloomberg News)
Capital Requirements
The bill rejects the Basel III accord and would raise capital requirements on megabanks - those with $500 billion of assets or more - to 15%, while banks with between $50 billion and $500 billion would face an 8% capital requirement. Smaller institutions would see no change in their capital requirements. Subsidiaries of large bank holding companies would have to be separately capitalized. (Image: Fotolia)
Capital Accounting
The bill is designed to require banks to focus on common equity and "other pure, loss-absorbing forms of capital." Regulators are required to count off-balance sheet assets and obligations and consider counterparty credit risk in calculating derivatives exposures. Regulators can also use risk-based capital requirements as a supplement for firms with more than $20 billion of assets. (Image: Fotolia)
Limits on Bank Activities
The bill would restrict bank holding companies ability to move assets or liabilities from non-banking affiliates to a banking affiliate, a provision designed to wall off a commercial bank's activities from its non-bank activities. Under the bill, the Fed would also prohibit non-depositories from access to the discount window or deposit insurance. (Image: Fotolia)
Examiner Ombudsman
The bill would create an "independent bank examiner ombudsman" that institutions can appeal to if they feel they have been unfairly treated by their regulator. Community banks have long pushed for a third-party appeals process. (Image: Fotolia)
Expanding Rural Lender Definition
The bill would expand the definition of "rural" lenders that can offer balloon mortgages under the Consumer Financial Protection Bureau's recently released mortgage rules. Small banks had complained the existing rules are too restrictive. (Image: Fotolia)
Other Community Bank Regulatory Relief
The bill would reduce some impediments for small banks to raise capital or pay dividends and simplify privacy notice requirements. (Image: Fotolia)
