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TCH Comment Letter to the Banking Agencies on Their Proposal to Simplify the Regulatory Capital Rules

The Clearing House (TCH) submitted a comment letter to the banking agencies on their proposal to simplify the regulatory capital rules. In the letter, TCH generally supports the agencies’ efforts to simplify the regulatory capital rules and to address concerns with the definition of high volatility commercial real estate (HVCRE) exposure. However, TCH believes that certain aspects of the proposal require modifications and the agencies should make other revisions to the capital rules. TCH argues that the agencies should: (i) revise the proposed definition of high volatility acquisition, development, or construction (HVADC) exposure and the manner of its implementation; (ii) apply all aspects of the proposal to the standardized approach calculations of all firms; (iii) allow advanced approaches firms to opt out of recognizing unrealized gains and losses on HQLA in regulatory capital; and (iv) reconsider the proposed limitations on the inclusion of minority interest in capital.