risk-based capital requirement

risk-based capital requirement

Evaluation of the capital adequacy of a financial institution according to the amount of risk attached to each type.One dollar in cash is much less risky than an unsecured promissory note for $1 from a con artist.Everything in between is a matter of degree.That is the premise that forms the basis of risk-based capital requirements.The Board of Governors of the Federal Reserve System sets the requirements for American financial institutions.This impacts the sizes and types of real estate loans financial institutions are willing to make.Internationally,the Basel II Accord provides guidelines for measuring risk when evaluating capital.

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Recognizing this problem, the Basel Committee has now introduced a simple, non-risk based leverage ratio to supplement the risk-based capital requirement that captures risks arising from total assets, he observed.
100% reduction in the risk-based capital requirement for toxic assets.
banks cast serious doubt on the credibility of the measure computed from the combination of a banks' own individual risk models for probability of default and loss given default and the regulators' model for computing the associated risk-based capital requirement.
Finally, since the requirements do not cover the full range of risks facing insurance firms, supervisors typically expect insurers to maintain multiples of the minimum risk-based capital requirement.
As of March 31, 2002, Fannie Mae's risk-based capital requirement was $20.
Credit ratings from rating agencies and certain limited alternative-credit-rating approaches are used to match more closely the risk-based capital requirement for these banking organizations to their relative risk of loss for certain positions in asset securitizations.
13, 2001) and the time OFHEO may classify an enterprise based on its risk-based capital requirement.
Credit ratings from rating agencies and certain limited alternative credit-rating approaches can be used by banks to match the risk-based capital requirement more closely to their relative risk of loss for certain positions in asset securitizations.
Third, the Health Organization Risk-Based Capital requirements introduced by NAIC are not expected to apply to life insurance companies that sell health insurance products, meaning that a product sold by a managed care organization could have a lower risk-based capital requirement than the same product sold by a life insurance company.
Since the NCUA first put the risk-based capital requirement in place over a decade ago, it has not been updated.

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