American regulators release proposed guidance for IRB systems for retail credit exposures

The Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Office of Thrift Supervision (The Agencies) have proposed guidelines for Internal Ratings-Based Systems for Retail Credit Risk for Regulatory Capital under the new Basel Accord, which is due for implementation at the end of 2007.

The Agencies are requesting comment from banking organisations on the proposed guidelines. Comments on the proposed guidance are requested by January 25, 2005.The proposed guidance describes the Agencies’ current views regarding the components and characteristics of a qualifying internal ratings-based (IRB) system for measuring credit risk of retail exposures. Retail exposures include various types of consumer credit such as residential mortgages, consumer credit cards, and automobile and

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