Federal Reserve System: Capital Adequacy Guidelines: Treatment of Perpetual Preferred Stock Issued to the United States Treasury Under the Emergency Economic Stabilization Act of 2008, GAO-09-167R, November 7, 2008
The Honorable Christopher
J. Dodd
Chairman
The Honorable Richard C. Shelby
Ranking Minority Member
Committee on Banking, Housing, and Urban Affairs
The Honorable Barney
Frank
Chairman
The Honorable Spencer Bachus
Ranking Minority Member
Committee on Financial Services
House of Representatives
Subject: Federal Reserve System: Capital Adequacy Guidelines: Treatment of
Perpetual Preferred Stock Issued to the
Pursuant to section
801(a)(2)(A) of title 5, United States Code, this is our report on a major rule
promulgated by the Federal Reserve System (Federal Reserve), entitled “Capital
Adequacy Guidelines: Treatment of Perpetual Preferred Stock Issued to the
United States Treasury Under the Emergency Economic Stabilization Act of 2008”
(Regulation Y; Docket No. R-1336). We
received the rule on
The interim final rule permits bank holding companies that
issue new senior perpetual preferred stock to the Treasury under the capital
purchase program announced by the Secretary of the Treasury on
Enclosed is our assessment of the Federal Reserve’s compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. Our review indicates that the Federal Reserve complied with the applicable requirements.
If you have any questions about this report or wish to contact GAO officials responsible for the evaluation work relating to the subject matter of the rule, please contact Michael R. Volpe, Assistant General Counsel, at (202) 512-8236.
signed
Robert J. Cramer
Associate General Counsel
Enclosure
cc: Laricke
D. Blanchard
Assistant to the Board
Board of Governors of the
Federal Reserve System
ENCLOSURE
REPORT UNDER 5 U.S.C. sect. 801(a)(2)(A) ON A MAJOR
RULE
ISSUED BY THE
FEDERAL RESERVE SYSTEM
ENTITLED
"CAPITAL ADEQUACY GUIDELINES: TREATMENT OF
PERPETUAL PREFERRED STOCK ISSUED TO THE
UNITED STATES TREASURY UNDER THE
EMERGENCY ECONOMIC STABLIZATION ACT OF 2008"
(REGULATION Y; DOCKET NO. R-1336)
(i) Cost-benefit analysis
The Federal Reserve did not prepare a cost-benefit analysis. However, the interim final rule does explain that the Federal Reserve finds strong public policy considerations to allow Senior Perpetual Preferred Stock issued to Treasury under the Troubled Asset Relief Program (TARP) to be included as Tier 1 capital for the purposes of the Federal Reserve’s risk-based and leverage capital rules and guidelines, as an exception to its longstanding stance regarding the unacceptability of a rate step-up in other regulatory capital instruments.
(ii) Agency actions relevant to the Regulatory
Flexibility Act, 5 U.S.C. sections 603-605, 607, and 609
The Federal Reserve certifies that this interim final rule will not affect a significant impact on a substantial number of small bank holding companies.
(iii) Agency actions relevant to sections 202-205 of
the Unfunded Mandates Reform Act of 1995, 2 U.S.C. sections 1532-1535
The Unfunded Mandate Reform Act does not apply to independent regulatory agencies, such as the Federal Reserve.
(iv) Other relevant information or requirements under
acts and executive orders
Administrative Procedure Act, 5 U.S.C. sections 551 et seq.
The Federal Reserve found that there is good cause for issuing the interim final rule and making the rule effective retroactively to October 17, 2008, and that it would be impracticable, unnecessary, or contrary to the public interest to issue a notice of proposed rulemaking and provide an opportunity to comment before the effective date. The Federal Reserve solicits comments on all aspects of the rule and will make changes it considers appropriate or necessary after review of any comments received.
Paperwork Reduction Act, 44 U.S.C. sections 3501-3520
The interim final rule contains no collection of information requirements under the Paperwork Reduction Act.
Statutory authorization for the rule
This
final rule is issued under the authority of the Emergency Economic
Stabilization Act of 2008, Division A of Pub. L. 110-342, 122 Stat. 3765
(2008).
Executive Order No. 12,866
The Executive Order does not apply to independent regulatory agencies, such as the Federal Reserve.
Executive Order No. 13,132 (Federalism)
The Executive Order does not apply to independent regulatory agencies, such as the Federal Reserve.