Summary

GAO reviewed the Federal Reserve System's (Reserve) new rule on treatment of perpetual preferred stock issued to the United States Treasury under the Emergency Economic Stabilization Act of 2008. GAO found that (1) the final rule permits bank holding companies that issue new senior perpetual preferred stock to the Treasury under the capital purchase program to include such capital instruments in Tier 1 capital for purposes of the Federal Reserve's risk-based and leverage capital rules and guidelines for bank holding companies; and (2) Reserve complied with the applicable requirements in promulgating the rule.