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The Federal Reserve Board on Tuesday announced a $3 million fine against Bank of New York Mellon Corporation for unsafe and unsound practices after the firm improperly assigned a lower risk weighting to a portfolio of assets, reducing the firm's risk-based capital ratios.
In 2010, following a change in the relevant accounting rules, BNY Mellon consolidated a portfolio of collateralized loan obligations onto its balance sheet. BNY Mellon incorrectly assigned the assets a zero-risk weighting, which was improper under the rules in place at the time. As a result of its improper treatment of the portfolio BNY Mellon understated its reported risk-weighted assets and overstated its risk-based capital ratios for nearly 14 quarters.
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The federal reserve board demanded immediate payment by bank wire and that is the end of the matter!
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