Spotlight: Home Equity |
Spotlight: Multifamily Housing |
State of the District |
National Banking Trends
By Michael Johnson, Senior Vice President
Supervision & Regulation
Federal Reserve Bank of Atlanta
As we approach midyear, I am glad to report that we continue to see signs of Sixth District banks making progress in overall financial performance. Despite this good news, however, the situation in the eurozone looms large as a risk to the broader economy. Still, there is no denying the increasing positive momentum we are seeing in bank performance in the Southeast. All told, I am cautiously optimistic about the remainder of 2012.
State of the District
Commercial real estate (CRE)
Commercial real estate is an integral part of the economic engine of the Sixth District, and in this edition of "ViewPoint," we explore some of the issues and trends behind the resurgence in the multifamily market and some of the continuing headwinds facing CRE. Please see more of the national and regional story in our spotlight article. For those bankers in our readership, you may also want to visit the latest program in our "Ask the Fed" series recorded on April 16 in Lexington, Kentucky. CRE and the residential markets were featured on the agenda.
Home equity loans (HELOCs)
Finally, I just wanted to draw your attention to several recent regulatory pronouncements.
First, on May 14 the Federal Reserve Board issued an interagency statement. The statement clarifies supervisory expectations for stress testing by community banks. The statement, I believe, is consistent with what I have said in some previous messages: while the supervisory stress-testing expectations for larger organizations will not trickle down to community banks, we still expect banking institutions regardless of size to abide by sound risk management practices and be able to analyze the potential impact of adverse outcomes on their financial condition. This guidance also highlights recent efforts by the Federal Reserve to reduce the burden on community banks by clarifying what guidance applies to them.
Second, on June 7, the Federal Reserve Board approved three notices of proposed rulemaking (NPRs) that would revise and restructure the Board's regulatory capital requirements. The three NPRs propose the Basel III capital standards, a standardized approach for risk-weighted assets, and changes to the advanced approaches rule. The proposals aim to reorganize the Board's capital rules and the market-risk capital rule into a comprehensive, integrated regulatory capital framework. The proposed framework would apply consolidated capital requirements to savings and loan holding companies. Please refer to the publicly available FAQs on the subject NPRs. Also publicly available in their respective NPRs are the appendices that summarize the parts of the Basel III and standardized approach NPRs that would apply to community banking organizations.
Understandably, the biggest impact of these rules is on large banks, but changes to the definition of capital, such as limits on deferred tax assets, will have an impact on all banks.
With that, I will sign off for now and extend my best wishes to all of you for continued financial performance improvement and, most importantly, a safe summer. Please share any feedback you may have with me at ViewPoint@atl.frb.org.