Large US banks may face a 20% increase in capital requirements in order to improve system flexibility. And according to the Wall Street Journal, US regulators will announce the measure later this month, after it suffered regional bankruptcies at the start of the year. It is expected to be the first of several steps to tighten Wall Street rules, a change in the more permissive Trump administration’s regulatory approach.
Institutions with large businesses will be hardest hit, while those that rely heavily on fee income may also face significant increases. Banks with assets of at least $100 billion must meet the new requirements, lowering the current $250 billion threshold. In view of this scenario, the giants of the banking sector are ensuring that such a large increase in capital requirements will lead to increased costs for consumers and will cause banks to stop providing certain services. JPMorgan CEO Jamie Dimon has been vocal in his criticism of the new capital requirements, calling them “bad for America.”
Michael Barr, vice president of oversight at the Fed, said in May this year that the agency is reviewing bank capital requirements and will apply restrictions in line with global Basel III standards, which were developed in response to the financial crisis. For Barr, the new banking supervision plan will be presented in the summer.
The Federal Reserve is playing a leading role in setting the new banking supervision rules, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, according to US media. The three agencies are expected to meet to hear the banks’ views before voting on and implementing the changes in the coming years. However, the failures that led to the collapse of some regional banks weigh heavily on them. The FDIC president himself, Martin Gruenberg, has admitted in this regard that “a central problem was that regulators failed to enforce compliance with the rules when problems were identified.”
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