Sales of Assets for Risk-Based Capital Purposes

This entry should be read in conjunction with the
banking agencies’ final rule revising the regulatory capital treatment of recourse arrangements and direct credit substitutes, including residual interests and credit-enhancing interest-only strips, which was published on November 29, 2001. This entry provides guidance for determining whether sales of loans, securities, receivables, and other assets are subject to the agencies’ risk-based capital standards and are reportable in Schedule RC-R, Regulatory Capital, and Schedule RC-S, Servicing, Securitization, and Asset Sale Activities. For information on the reporting of transfers of financial assets for purposes of the balance sheet, income statement, and related schedules, see the Glossary entry for “transfers of financial assets.”
For purposes of reporting in Schedules RC-R and RC-S, some transfers of assets that qualify as sales under generally accepted accounting principles are subject to the agencies’ risk-based capital standards because they meet the following definition of “recourse” that is set forth in those standards.
Definition of “recourse” for risk-based capital purposes