Summary

GAO reviewed the Board of Governors of the Federal Reserve System's (Board) new rule on the treatment of perpetual preferred stock issued to the United States Treasury. GAO found that (1) the final rule permits bank holding companies that issue new senior perpetual preferred stock to the Treasury under the capital purchase program announced by the Secretary of the Treasury on October 14, 2008, to include such capital instruments in tier 1 capital for purposes of the Federal Reserve's risk-based and leverage capital rules and guidelines for bank holding companies; and (2) that the Board complied with applicable requirements in promulgating the rule.