On December 16, the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and Office of Thrift Supervision announced the approval of a final rule that changes how banks, bank holding companies and savings associations (Banking Organizations) calculate regulatory capital. Under the new rule, Banking Organizations may reduce the amount of goodwill required to be deducted from tier I capital by the amount of any deferred tax liability associated with such goodwill. The regulatory capital deduction for goodwill will be equal to the maximum capital reduction resulting from a complete write-off of the goodwill under U.S. GAAP.  

The final rule will be effective 30 days following publication in the Federal Register, but Banking Organizations may elect to adopt its provisions for purposes of regulatory capital reporting for the period ending December 31, 2008.