The U.S. Basel III final rule is the most complete overhaul of U.S. bank capital standards since the U.S. adoption of Basel I in 1989 – nearly a quarter of a century ago.  The final rule comprehensively revises the regulatory capital framework for the entire U.S. banking sector by implementing many aspects of Basel III as well as key provisions of the Dodd-Frank Act, including the Collins Amendment capital floor in Section 171 and the ban on references to credit ratings in Section 939A.  The U.S. Basel III final rule also makes significant changes to the 2012 U.S. Basel III proposals.

The U.S. Basel III final rule is notable for its broad scope of application.  It applies to the entire U.S. banking sector, from community banks to regional banks to the largest and most internationally active U.S. banking organizations.  The final rule also applies to U.S. bank subsidiaries and U.S. bank holding company subsidiaries of foreign banks.  In addition, using its authority under the Dodd-Frank Act to establish enhanced prudential standards, the Federal Reserve has proposed to apply U.S. Basel III to: (1) any U.S. intermediate holding company (“IHC”) that is required to be established by a large foreign banking organization (“FBO”) for its U.S. banking and non-banking subsidiaries; (2)U.S. nonbank financial companies that are designated as systemically important by the U.S. Financial Stability Oversight Council (“nonbank SIFIs”), subject to any case-by-case tailoring; and (3) any U.S. IHC that is required to be established by a foreign nonbank SIFI, subject to any case-by-case tailoring.

We have prepared a visual memorandum that uses diagrams, flowcharts, timelines, examples and comparison tables to illustrate key aspects of the U.S. Basel III final rule.  The visual memorandum is available here.

We have also developed an interactive web tool that compares U.S. Basel III with the existing risk weights framework.  The tool is available here.