Fed Again Keeps Countercyclical Capital Buffer at Zero

For the second year in a row, the Federal Reserve today said that the countercyclical capital buffer for banking organizations using the Basel III advanced approaches will remain at zero percent. The buffer is a tool by which the Fed can gradually raise the capital requirements on internationally active banking organizations — typically those with assets of over $250 billion or over $10 billion in on-balance sheet foreign exposures — when there is a risk of meaningfully above-normal losses in the future.

Should the Fed — in consultation with other bank regulators – decide to increase the buffer level, banking organizations subject to it would have 12 months to come into conformance with the higher level. For more information, contact ABA’s Hugh Carney.