No Change For Bank Asset Holding Companies

     WASHINGTON (CN) – Because the credit markets remain stalled, the Federal Reserve Board is postponing rule changes that would have restricted the types of assets bank holding companies may claim as capital on their balance sheets.

     The postponed rules would have limited the amount of tier 1 capital – so called core capital and disclosed reserves that regulators analyze to determine a bank’s capital adequacy – bank holding companies could claim that is composed of trust preferred securities to 25% of all core capital. Trust preferred securities are trusts created by a bank holding company, which issue debt notes for purchase by investors. The money raised by selling debt this way is recognized as capital, and the interest payments paid to investors are tax deductible for the holding company.

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