Capital; Capital Adequacy Guidelines — 1994-12-08 [94-30156]

The Board of Governors of the Federal Reserve System is amending its risk-based capital guidelines for state member banks and bank holding companies. Under this final rule, institutions are generally directed to not include in regulatory capital the ``net unrealized holding gains (losses) on securities available for sale,'' the new common stockholders' equity account created by Statement of Financial Accounting Standards Number 115 (FAS 115), Accounting for Certain Investments in Debt and Equity Securities. Net unrealized losses on marketable equity securities (i.e., equity securities with readily determinable fair values), however, will continue to be deducted from Tier 1 capital. This rule has the general effect of valuing available-for-sale securities at amortized cost (i.e., based on historical cost), rather than at fair value (i.e., generally at market value), for purposes of calculating the risk-based and leverage capital ratios.