FDIC Announces Revisions to Proposed Large Bank Pricing Rule

June 12, 2012 by Zack Smith

Earlier this spring, the Federal Deposit Insurance Corporation (FDIC) announced a proposed amendment to the Assessments, Dividends, Assessment Base and Large Bank Pricing (LBP) rule that it put forward in February 2011.

The revised rule attempts to address lender concerns that they would be unable to comply with the new rule’s provisions, particularly the added requirement of reporting subprime and leveraged consumer loans.

Under the new proposal, subprime consumer loans would be renamed “higher-risk consumer loans and securities,” and would be defined as:

  • All consumer loans where, as of origination, or, if the loan has been refinanced, as of refinance, the probability of default within two years was greater than 20 percent, excluding those consumer loans that meet the definition of a nontraditional mortgage loan; and
  • Securitizations that are more than 50 percent collateralized by consumer loans meeting the criteria in (a), except those classified as trading book.

The FDIC is reviewing comments on the changes and has extended the compliance date for the new reporting requirements until October 1, 2012.