TWK ADVISORS LLC - Regulatory Capital Rules Comment Letter

Sep 10, 2026

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Comment letter prepared on behalf of TWK Advisors LLC responding to the Notice of Proposed Rulemaking on Regulatory Capital Rules, including the Standardized Approach for risk-weighted assets. The submission supports strengthening capital and enhancing risk sensitivity while requesting clarification to recognize eligible synthetic securitizations as a credit risk mitigation strategy for loan concentration metrics. It argues such securitizations can reduce CRE concentration risk, preserve customer relationships, and avoid asset sales and related mark-to-market losses, aligning supervisory assessments and interagency guidance with established concentration risk practices.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages12

Reading Time30 min

AccessFree to download

Regulatory Capital Rules comment letter

Scope and supporting perspective

Request for clarification on synthetic securitizations

Rationale for using synthetic risk transfers

Proposed scalable framework and supervisory alignment

TWK ADVISORS LLC Via Electronic Mail: June 16, 2026 Benjamin W. McDonough, Secretary Board of Governors of the Federal Reserve System 20th Street and Constitution Avenue NW Washington, DC, 20551 Docket Number: R-1888; RIN 7100-AH21 Jennifer M. Jones, Deputy Executive Secretary Federal Deposit Insurance Corporation 550 17th Street NW Washington DC 20429 RIN 3064-AG23 Chief Counsel’s Office Attention: Comment Processing Office of the Comptroller of the Currency 400 7th Street SW, Suite 3E-218 Washington, DC 20219 Docket ID: OCC-2026-0034 RIN 1557-AF49 Re: Regulatory Capital Rules: Regulatory Capital and Standardized Approach for Risk-Weighted Assets Dear Sir or Madam: On behalf of TWK Advisors LLC, I am responding to the Notice of Proposed Rulemaking (“NPR”) by the Board of Governors of the Federal Reserve System (“Federal Reserve”), the Comptroller of the Currency (“OCC”), and Federal Deposit Insurance Corporation’s (“FDIC”) (collectively, the“Agencies”) on the Regulatory Capital Rules: Regulatory Capital and Standardized Approach for Risk-weighted Assets (“Revised SA”) .1 TWK Advisors LLC is an advisory and consulting firm with a focus on the financial services sector in the United States. This letter has been prepared from the perspective of an experienced 1 Notice of Proposed Rulemaking-Regulatory Capital Rules: Regulatory Capital and Standardized Approach for Risk-Weighted Assets. 91 Fed. Reg. 15332 (Mar. 27, 2026) . TWK ADVISORS LLC practitioner in the financial sector with over 47 years of banking and consulting experience during which time I completed transactions aggregating more than $20.5 billion in value encompassing a wide variety of capital markets and advisory transactions. I advised the U.S. Treasury on the $9 billion Emergency Capital Investment Program and the FDIC in the resolution of multiple problem banks. In addition, I published more than 25 industry research reports and comment letters covering complex regulatory and accounting considerations such as CECL, Basel III, TLAC, and the Bank Merger Act that impact bank and non-bank ﬁnancial institutions. Most recently, in December 2024, I co-authored along with Cadwalader and KPMG, a handbook for credit risk transfers for U.S. Banks.2 We support the Agencies’ objectives to strengthen capital and enhance risk sensitivity. However, the NPR does not recognize the risk-transfer benefits of eligible synthetic securitizations for loan concentration metrics despite alignment with the Revised SA framework. Clariﬁcation is needed to recognize that eligible synthetic securitizations can be used as a valid credit risk mitigation strategy to reduce CRE loan concentration risk. Indeed, the Basel Committee’s February 2026 publication on Synthetic Risk Transfers noted that“credit risk management considerations can also be important factors in bank issuers’ decisionmaking process. In some cases, banks have issued SRTs without the primary objective of obtaining capital relief. Instead, many bank issuers consider SRTs as part of a broader toolkit to actively manage credit risk alongside credit insurance, loan sales, and traditional securitization. For example, SRTs can be used to reduce risk exposure to a speciﬁc sector or asset class, or counterparty relative to a bank’s established concentration limits in those areas, thereby increasing lending capacity to that sector or asset class without breaching risk limits. Moreover, because SRTs do not require asset sales, they allow banks to retain customer relationships and avoid realizing mark-to-market losses.”3 While U.S. banks could get CRE concentration relief by selling loans outright or executing a traditional securitization, there are many reasons why a synthetic securitization would be preferred including: retaining customer relationships, avoiding potential loss on sale of loans with below market yields, and avoiding reduction in net interest income from reducing the

FAQs

What rulemaking and topics does the letter address?

The letter responds to the NPR on Regulatory Capital Rules, specifically the Standardized Approach for risk-weighted assets, across the Federal Reserve, OCC, and FDIC.

What clarification does TWK Advisors LLC request?

The letter asks the agencies to recognize eligible synthetic securitizations as valid credit risk mitigation for loan concentration metrics under the Revised SA framework.

Why does the letter argue synthetic securitizations should be preferred in some cases?

It cites benefits such as retaining customer relationships, avoiding potential losses from selling loans at below-market yields, and preventing reductions in net interest income by reducing the loan portfolio.

Sep 10, 2026

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