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Update on Basel III and Final Rule for Basel 2.5

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On June 7, 2012, the Federal Reserve Board of Governors unanimously approved the release of three Notices of Proposed Rulemaking (NPRs) for Basel III and the final rule for Basel 2.5.

Under the proposal, the approach for calculating risk weighted assets would also change the treatment of residential mortgages, making it more risk-sensitive. Under the NFP, residential mortgages are divided into two categories and the risk weights would depend heavily on LTV and would range from 35%-200%. 

The new proposed capital rule does not recognize PMI for determining the capital… Read More

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