Sec. 604. Study on altering the current prompt corrective action rules
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The Comptroller General of the United States shall conduct a study to assess the benefits and feasibility of altering the current prompt corrective action rules and replacing the Basel-based capital ratios with the nonperforming asset coverage ratio or NACR as the trigger for specific required supervisory interventions. The Comptroller General shall ensure that such study includes the following: An assessment of the performance of an NACR forward-looking measure of a banking organization’s solvency condition relative to the regulatory capital ratios currently used by prompt corrective action rules.
An analysis of the performance of alternative definitions of nonperforming assets. An assessment of the impact of two alternative intervention thresholds: An initial
(high)intervention threshold, below which appropriate Federal banking agency examiners are required to intervene and assess a banking organization’s condition and prescribe remedial measures. A lower threshold, below which banking organizations must increase their capital, seek an acquirer, or face mandatory resolution within 90 days. Not later than the end of the 1-year period beginning on the date of the enactment of this Act, the Comptroller General shall submit a report to the Congress containing— all findings and determinations made in carrying out the study required under subsection (a); and recommendations on the most suitable definition of nonperforming assets, as well as the two numerical thresholds that trigger specific required supervisory interventions.