Circular
Comments Requested on Proposed Rule to Reduce the Amount of Goodwill Deduction from Tier 1 Capital
September 15, 2008
Circular No. 11986

The Federal Reserve Board has requested public comment on an interagency notice of proposed rulemaking (NPR) that would permit a banking organization to reduce the amount of its goodwill deduction from tier 1 capital by any associated deferred tax liability.

Under the proposed rule, the regulatory capital deduction for goodwill would be equal to the maximum capital reduction that could occur as a result of a complete write-off of the goodwill, which is equal to the amount of goodwill reported on the balance sheet under generally accepted accounting principles (GAAP) less any associated deferred tax liability. The proposal is consistent with the treatment of other similar assets.

See the press release for full details.

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