15 Percent Tier 1 Leverage: Undercapitalized?
Among the various jurisdiction clauses and regulatory boilerplate common to consent orders, the FDIC routinely recites its conclusion that the requirements for issuance of an order under Section 8(b) of the Federal Deposit Insurance Act are met. In the context of a consent order, this statement has the potential to support a Prompt Corrective Action reclassification without a hearing, which may result in the subject institution being deemed “undercapitalized,” regardless of the bank’s actual Tier 1 capital position.
Partner Pinchus D. Raice, Chairman of Pryor Cashman’s Financial Institutions Group (FIG), and FIG associate Robert C. Lamonica have written an informative legal update entitled "15 Percent Tier 1 Leverage: Undercapitalized?"
To read the update that appeared in Law360, please click here.
