Fed Vice-Chair of Supervision says US banks are to see new mortgage capital requirements in Basel plan
Importance
Level 1
- Sees a path forward that incorporates both renewed bank participation in the mortgage market and a safe and sound banking system.
- Two regulatory proposals will soon be introduced that, among other broader changes to the regulatory capital framework, would increase bank incentives to engage in mortgage origination and servicing.
- Proposals would remove the requirement to deduct mortgage servicing assets from regulatory capital while maintaining the 250 percent risk weight assigned to these assets.
- The proposals would also consider increasing the risk sensitivity of capital requirements for mortgage loans on bank books.
- Strengthening bank participation in these activities does not threaten the safety and soundness of the banking system.
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