Circular
Agencies Approve Final Rule on Deduction of Goodwill from Tier 1 Capital
December 17, 2008
Circular No. 12041

The federal banking and thrift regulatory agencies have approved a final rule that would permit a banking organization to reduce the amount of goodwill it must deduct from tier 1 capital by any associated deferred tax liability.

Under the final 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 under generally accepted accounting principles (GAAP).

The final rule was approved by the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and Office of Thrift Supervision.

See press release for full details.

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