Regulators announce changes to Interim Final Rule

Yesterday, the OCC, Fed, and the FDIC announced a final rule that makes technical changes in the interim final rule that the agencies announced on March 27, 2020. The interim final rule allows certain banks to delay the estimated impact on regulatory capital stemming from the implementation of Accounting Standards Update No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (CECL2). The changes:

• Specify that Category III banking organizations that elect to use the CECL transition in the interim final rule can adjust total leverage exposure when calculating the supplemental leverage ratio.
• Clarify that for purposes of calculating the modified CECL transitional amount and modified adjusted allowances for credit losses transitional amount under the interim final rule, the CECL transitional amount, deferred tax assets transitional amount, and adjusted allowances for credit losses transitional amount can be either a positive or negative number.